Exporter Wage Premium Research Articles

Worker‐specific Effects of Globalisation

AbstractThis paper sets up a general equilibrium model, in which firms are heterogeneous due to productivity differences and workers have fairness preferences and hence provide full effort only if their factor return is sufficiently high. With the wage considered to be fair by workers depending on the operating profits of the firm in which they are employed, more productive firms in this setting are not only larger and make higher profits but they also have to pay higher wages due to rent‐sharing. This mechanism leads to wage differentiation even if all workers share the same individual characteristics. We use this framework to study worker‐specific effects of trade between two symmetric countries. Exporters in this setting make higher operating profits and hence have to pay higher wages than non‐exporters. This exporter wage premium provides a source for losses from trade and, all other things equal, makes a negative employment effect of trade more likely. Furthermore, it contributes significantly to a general increase in intra‐group income inequality among production workers when a country moves from autarky to trade.

Higher wages in exporting firms: self-selection, export effect, or both? First evidence from linked employer-employee data

While it is a stylized fact that exporting firms pay higher wages than non-exporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.

Firms’ main market, human capital, and wages

AbstractThe literature on the exporter wage premium has focused on an exporter/non-exporter dichotomy. Instead, this paper provides first evidence that there is a more continuous destination-market effect. Using Spanish data, we estimate wage premia for establishments selling to the national, European Union, and rest of the world markets (with respect to wages in local-market establishments). Controlling for worker and establishment characteristics, output-market wage premia are increasing in market remoteness and employee education. Establishment human capital is also increasing in output-market remoteness. The paper builds a theoretical model that provides a potential explanation for these empirical results, which is also consistent with the recent evidence on the positive relationship between output-market remoteness and quality of exports.

Worker-Specific Effects of Globalisation

This paper sets up a general equilibrium model, in which firms are heterogeneous due to productivity differences and workers have fairness preferences and hence provide full effort only if their factor return is sufficiently high. With the wage considered to be fair by workers depending on the operating profits of the firm in which they are employed, more productive firms in this setting are not only larger and make higher profits but they also have to pay higher wages due to rent-sharing. This mechanism leads to wage differentiation even if all workers share the same individual characteristics. We use this framework to study worker-specific effects of trade between two symmetric countries. Exporters in this setting make higher operating profits and hence have to pay higher wages than non-exporters. This exporter wage premium provides a source for losses from trade and, all other things equal, makes a negative employment effect of trade more likely. Furthermore, it contributes significantly to a general increase in intra-group income inequality among production workers when a country moves from autarky to trade.

Firms in Globalization and Wage Inequality

This paper provides micro-level evidences on the close linkage between globalization and wage inequality. We investigate the wage premium and wage spillovers effect of foreign-invested enterprises and exporters in Chinese manufacturing industry. The results show that there is significant foreign and export wage premium. The presence of foreign and Hong Kong, Macao and Taiwan (HMT) investment has significant negative spillovers on wage level of domestic firms. Moreover, foreign and HMT investment discourages the wage growth in domestic firms. The evidences suggest that exposure to international trade and foreign investment increases the inter-enterprise wage inequality.

Human capital and wages in exporting firms

This paper studies the link between the education level of workers, export performance and wages. We argue that firms may escape intense competition in international markets by using high skilled workers to differentiate their products. This story is consistent with our empirical results. Using a very rich matched worker-firm longitudinal dataset, we find that there is a weak negative direct effect of exporting on wages, but an interaction term between export intensity and skill intensity has a positive impact on wages. That is, we find an export wage premium, but only in firms where the skill intensity is sufficiently high.

Higher Wages in Exporting Firms: Self-Selection, Export Effect, or Both? First Evidence from German Linked Employer-Employee Data

While it is a stylized fact that exporting firms pay higher wages than non-exporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.

Do exporters really pay higher wages? First evidence from German linked employer–employee data

Many plant-level studies find that average wages in exporting firms are higher than in non-exporting firms from the same industry and region. This paper uses a large set of linked employer–employee data from Germany to analyze this exporter wage premium. We show that the wage differential becomes smaller but does not completely vanish when observable and unobservable characteristics of the employees and of the workplace are controlled for. For example, blue-collar (white-collar) employees working in a plant with an export-sales ratio of 60% earn about 1.8 (0.9) % more than similar employees in otherwise identical non-exporting plants.

Export Activity, Firm Size and Wage Structure: Evidence from Taiwanese Manufacturing Firms*

This study adopts a semiparametric smooth coefficient model to evaluate the export–wage premiums, firm size–wage premiums, and the wage gap between skilled and unskilled labor. Particular focus is placed upon widespread evidence indicating that pay levels in ‘large’ and ‘export‐oriented’ firms are higher than in their ‘small’ and ‘domestic‐oriented’ counterparts. Applying the firm‐level data for Taiwanese manufacturing firms, we find a positive export–wage premium for skilled workers and a negative export–wage premium for unskilled workers. The hypothesis of a constant export premium across firm size is rejected. While most of the export–wage premiums for skilled labor can be attributed to the small and medium firms, the large exporting firms have a significant adverse effect on wages for unskilled labor. Moreover, our results suggest that the firm size–wage premiums for skilled workers are larger than those for unskilled workers. The wage gap between the two skill groups is also sensitive to size categories.

Is There Really an Export Wage Premium? A Case Study of Los Angeles Using Matched Employee-Employer Data

This article investigates the effects of exporting on wages, specifically the claim that workers are paid higher wages if they are employed in manufacturing plants that export vis-à-vis plants that do not. Past research on U.S. plants has supported the existence of an export wage premium, though European studies dispute those results, calling for more care in econometric investigation to control for worker characteristics. The authors answer this call by developing a matched employee-employer data set linking worker characteristics from the one-in-six long form of the Decennial Household Census to manufacturing establishment data from the Longitudinal Research Database. Analysis focuses on 1990 and 2000 data for the Los Angeles Consolidated Metropolitan Statistical Area. Results confirm that the average wage in manufacturing plants that export is larger. However, after controlling for worker characteristics such as age, gender, education, race, and nationality, the export wage premium vanishes. That is, when comparing workers with similar characteristics, there is no wage difference between exporting and nonexporting plants. These results concord with recent findings from Europe and elsewhere.

Human Capital and Wages in Exporting Firms

This paper studies the link between a firm's education level, export performance and wages of its workers. We argue that firms may escape intense competition in international markets by using high skilled workers to differentiate their products. This story is consistent with our empirical results. Using a very rich matched worker-firm longitudinal dataset we find that firms with high export intensities pay higher wages. However, an interaction term between export intensity and skill intensity has a positive impact on wages and it absorbs the direct effect of the export intensity. That is, we find an export wage premium, but it accrues to workers in firms with high skill intensities.