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Exporters and the rise in wage inequality: Evidence from German linked employer–employee data

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  • Baumgarten, Daniel

Abstract

Using a linked employer–employee data set of the German manufacturing sector, this paper analyses the role of exporting establishments in explaining rising wage dispersion both within and between skill groups in the time period 1996 to 2007. A decomposition analysis shows that the strong increase in the exporter wage gap, conditional on workers' skill levels, contributed to the growth in wage inequality, whereas the increase in the exporters' share in total employment worked towards a reduction in wage dispersion. The resulting net contribution is positive (inequality-increasing) but moderate. These findings are consistent with recent heterogeneous-firm trade models that feature an exporter wage premium as well as variability of the premium with respect to increasing trade liberalisation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 90 (2013)
Issue (Month): 1 ()
Pages: 201-217

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Handle: RePEc:eee:inecon:v:90:y:2013:i:1:p:201-217

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Exports; Wages; Exporter wage premium; Wage inequality; Linked employer–employee data; Decomposition;

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References

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Cited by:
  1. Elhanan Helpman & Oleg Itskhoki & Marc-Andreas Muendler & Stephen Redding, 2012. "Trade and Inequality: From Theory to Estimation," CEP Discussion Papers dp1138, Centre for Economic Performance, LSE.
  2. Mario Macis & Fabiano Schivardi, 2012. "Exports and Wages: Rent Sharing, Workforce Composition or Returns to Skills?," EIEF Working Papers Series 1205, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2012.
  3. Gabriel J. Felbermayr & Giammario Impullitti & Julien Prat, 2014. "Firm Dynamics and Residual Inequality in Open Economies," CESifo Working Paper Series 4666, CESifo Group Munich.
  4. Joachim Wagner, 2011. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," Working Paper Series in Economics 210, University of Lüneburg, Institute of Economics.
  5. Achim Schmillen, 2011. "The Exporter Wage Premium Reconsidered Destinations, Distances and Linked Employer-Employee Data," Working Papers 305, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  6. Dahai Fu & Yanrui Wu, 2011. "Export Wage Premium in China's Manufacturing Sector: A Firm Level Analysis," Economics Discussion / Working Papers 11-22, The University of Western Australia, Department of Economics.
  7. Philip Du Caju & François Rycx & Ilan Tojerow, 2012. "Wage structure effects of international trade in a small open economy: The case of Belgium," ULB Institutional Repository 2013/138896, ULB -- Universite Libre de Bruxelles.
  8. Gabriel Felbermayr & Mario Larch, 2014. "Transatlantic Free Trade: Questions and Answers from the Vantage Point of Trade Theory," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 14(4), pages 03-17, 01.

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