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

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  • Schank, Thorsten

    ()
    (University of Mainz)

  • Schnabel, Claus

    ()
    (University of Erlangen-Nuremberg)

  • Wagner, Joachim

    ()
    (Leuphana University Lüneburg)

Abstract

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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3359.

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Length: 26 pages
Date of creation: Feb 2008
Date of revision:
Publication status: published in: Review of World Economics, 2010, 146 (2), 303-322
Handle: RePEc:iza:izadps:dp3359

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Keywords: exporter wage premium; wages; exports; Germany;

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References

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  1. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, Elsevier, vol. 47(1), pages 1-25, February.
  2. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 433-44, June.
  3. Wagner, Joachim, 2005. "Exports and Productivity : A survey of the evidence from firm level data," HWWA Discussion Papers 319, Hamburg Institute of International Economics (HWWA).
  4. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  5. Joachim Wagner, 2007. "Exports and Productivity – Comparable Evidence for 14 Countries," Working Paper Series in Economics 65, University of Lüneburg, Institute of Economics.
  6. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  7. Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  8. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, Elsevier, vol. 77(2), pages 287-292, October.
  9. Hartmut Egger & Udo Kreickemeier, 2009. "Firm Heterogeneity And The Labor Market Effects Of Trade Liberalization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 187-216, 02.
  10. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2006. "Do exporters really pay higher wages? First evidence from German linked employer-employee data," Working Paper Series in Economics 28, University of Lüneburg, Institute of Economics.
  11. International Study Group on Exports and Productivity (ISGEP), 2008. "Understanding Cross-Country Differences in Exporter Premia: Comparable Evidence for 14 Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 144(4), pages 596-635, December.
  12. Bernard, A. & Wagner, J., 1996. "Exports and Success in German Manufacturing," Working papers 96-10, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Munch, Jakob Roland & Skaksen, Jan Rose, 2008. "Human capital and wages in exporting firms," Journal of International Economics, Elsevier, Elsevier, vol. 75(2), pages 363-372, July.
  14. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 255-83, May.
  15. Ernst Fehr & Simon Gaechter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," CESifo Working Paper Series 336, CESifo Group Munich.
  16. repec:rus:hseeco:122439 is not listed on IDEAS
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Cited by:
  1. Achim Schmillen, 2011. "The Exporter Wage Premium Reconsidered Destinations, Distances and Linked Employer-Employee Data," Working Papers, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) 305, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  2. Michael Pflüger & Uwe Blien & Joachim Möller & Michael Moritz, 2013. "Literature Overview - Labor Market Effects of Trade and FDI – Recent Advances and Research Gaps," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(1), pages 86-116, January.
  3. Francisco Alcalá & Pedro Hernández, 2010. "Firms’ main market, human capital, and wages," SERIEs, Spanish Economic Association, vol. 1(4), pages 433-458, September.
  4. Joachim Wagner, 2009. "Exporte und Firmenerfolg: Welche Firmen profitieren wie vom internationalen Handel?," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, Springer, vol. 3(2), pages 109-122, October.
  5. Hernández, Pedro, 2012. "Is there a producer quality wage premium similar to the exporter wage premium?," MPRA Paper 41082, University Library of Munich, Germany.

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