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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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  • Sébastien Breau
  • David L. Rigby
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    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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    File URL: ftp://ftp2.census.gov/ces/wp/2006/CES-WP-06-06.pdf
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    Bibliographic Info

    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
    Date of revision:
    Handle: RePEc:cen:wpaper:06-06

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    1. Douglass C. North, 1955. "Location Theory and Regional Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 63, pages 243.
    2. John M. Abowd & John C. Haltiwanger & Julia I. Lane, 2004. "Integrated Longitudinal Employee-Employer Data for the United States," Longitudinal Employer-Household Dynamics Technical Papers, Center for Economic Studies, U.S. Census Bureau 2004-02, Center for Economic Studies, U.S. Census Bureau.
    3. John Haltiwanger & Marilyn E. Manser & Robert Topel, 1998. "Labor Statistics Measurement Issues," NBER Books, National Bureau of Economic Research, Inc, number halt98-1, July.
    4. Andrew Bernard & Joachim Wagner, 1997. "Exports and success in German manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 133(1), pages 134-157, March.
    5. 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.
    6. Kenneth R. Troske, 1998. "The Worker-Establishment Characteristics Database," NBER Chapters, in: Labor Statistics Measurement Issues, pages 371-404 National Bureau of Economic Research, Inc.
    7. Johannes Van Biesebroeck, 2003. "Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants," NBER Working Papers 10020, National Bureau of Economic Research, Inc.
    8. Heyman, Fredrik & Sjöholm, Fredrik & Gustavsson Tingvall, Patrik, 2004. "Is There Really A Foreign Ownership Wage Premium?Evidence From Matched Employer-Employee Data," EIJS Working Paper Series, The European Institute of Japanese Studies 206, The European Institute of Japanese Studies.
    9. Chin Hee Hahn, 2004. "Exporting and Performance of Plants: Evidence from Korean Manufacturing," NBER Working Papers 10208, National Bureau of Economic Research, Inc.
    10. David Greenaway & Richard Kneller, 2004. "Exporting and Productivity in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 20(3), pages 358-371, Autumn.
    11. 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).
    12. A. Isgut, 2001. "What's Different about Exporters? Evidence from Colombian Manufacturing," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 37(5), pages 57-82.
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    Cited by:
    1. Vu, Van Huong, 2012. "Does export participation affect wages and employment quality? the case of Vietnamese SMEs," MPRA Paper 38696, University Library of Munich, Germany.
    2. Fu, Dahai & Wu, Yanrui, 2013. "Export wage premium in China's manufacturing sector: A firm level analysis," China Economic Review, Elsevier, Elsevier, vol. 26(C), pages 182-196.
    3. Antoni, Manfred & Janser, Markus & Lehmer, Florian, 2014. "The hidden winners of renewable energy promotion : insights into sector-specific wage differentials," IAB Discussion Paper 201412, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Huong Vu & Steven Lim & Mark Holmes & Tinh Doan, 2013. "Firm Exporting and Employee Benefits: First Evidence from Vietnam Manufacturing SMEs," Economics Bulletin, AccessEcon, vol. 33(1), pages 519-535.
    5. World Bank, 2007. "Economic Performance in Latin America and the Caribbean : A Microeconomic Perspective," World Bank Other Operational Studies 7857, The World Bank.
    6. David Rigby & Sebastien Breau, 2006. "Impacts of Trade on Wage Inequality in Los Angeles: Analysis Using Matched Employer-Employee Data," Working Papers, Center for Economic Studies, U.S. Census Bureau 06-12, Center for Economic Studies, U.S. Census Bureau.
    7. Pablo Fajnzylber & J. Luis Guasch & J. Humberto López, 2009. "Does the Investment Climate Matter? Microeconomic Foundations of Growth in Latin America," World Bank Publications, The World Bank, number 6300, August.
    8. Rigby, D L & Breau, Sebastien, 2007. "Impacts of Trade on Wage Quality in Los Angeles: Analysis Using Matched Employer-Employee Data," Center for Global, International and Regional Studies, Working Paper Series, Center for Global, International and Regional Studies, UC Santa Cruz qt0fh5z1hf, Center for Global, International and Regional Studies, UC Santa Cruz.

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