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

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Author Info
Sébastien Breau
David L. Rigby
Abstract

This paper 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 export. Past research on US 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. We answer this call 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. Our results confirm that the average wage in manufacturing plants that export is greater than that in manufacturing plants that do not export. 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 non-exporting plants. These results concord with recent findings from Europe and elsewhere.

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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 06-06.

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Length: 24 pages
Date of creation: Feb 2006
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Handle: RePEc:cen:wpaper:06-06

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, vol. 67(2), pages 373-391, December. [Downloadable!] (restricted)
  2. Heyman, Fredrik & Sjöholm, Fredrik & Gustavsson Tingvall, Patrik, 2006. "Is There Really A Foreign Ownership Wage Premium? Evidence From Matched Employer-Employee Data," EIJS Working Paper Series 230, The European Institute of Japanese Studies. [Downloadable!]
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  3. Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2004. "Exporting Firms Do Not Pay Higher Wages, Ceteris Paribus. First Evidence from Linked Employer-Employee Data," IZA Discussion Papers 1185, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May. [Downloadable!] (restricted)
  5. Bernard, A. & Wagner, J., 1996. "Exports and Success in German Manufacturing," Working papers 96-10, Massachusetts Institute of Technology (MIT), Department of Economics.
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  6. Choi, E Kwan & Harrigan, James, 2004. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  7. Kenneth R Troske, 1995. "The Worker-Establishment Characteristics Database," Working Papers 95-10, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  8. Chin Hee Hahn, 2004. "Exporting and Performance of Plants: Evidence from Korean Manufacturing," NBER Working Papers 10208, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. John M. Abowd & John Haltiwanger & Julia Lane, 2004. "Integrated Longitudinal Employer-Employee Data for the United States," American Economic Review, American Economic Association, vol. 94(2), pages 224-229, May. [Downloadable!] (restricted)
  10. David Greenaway & Richard Kneller, 2004. "Exporting and Productivity in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 358-371, Autumn.
  11. Douglass C. North, 1955. "Location Theory and Regional Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 63, pages 243. [Downloadable!] (restricted)
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  1. David Rigby & Sebastien Breau, 2006. "Impacts of Trade on Wage Inequality in Los Angeles: Analysis Using Matched Employer-Employee Data," Working Papers 06-12, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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