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Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels

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  • Martins, Pedro S.

    ()
    (Queen Mary, University of London)

  • Opromolla, Luca David

    ()
    (Banco de Portugal)

Abstract

We investigate the relationship between exporting, importing, and wage premia using a rich matched employer-employee data set. We improve on the previous literature (i) by using a new methodology to quantify the contribution of an extensive set of worker- and firm-level observable and unobservable characteristics to the wage gap, and (ii) by controlling for the import as well as the export activity of the firm. These two innovations allow us to avoid large biases that characterized the previous literature. A robust result is that the hiring policy of exporters is quite different than the one of importers. While firm size and sales are, to different extents, important components of the wage gap both for exporters and importers, importers hire workers that are overwhelmingly more able than the average. Workers at exporting firms, on the contrary, are no different in terms of unobserved time-invariant characteristics. Our analysis provides a useful guidance for recent theories that aim at explaining participation both in export and import markets and at including non-neoclassical labor market features into trade models.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6013.

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Length: 31 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6013

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Keywords: globalization; export; import; wage differentials;

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  1. Gabor Békés & Carlo Altomonte, 2009. "Trade Complexity and Productivity," Working Papers, Fondazione Eni Enrico Mattei 2009.62, Fondazione Eni Enrico Mattei.
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Citations

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Cited by:
  1. Luca David Opromolla, 2013. "Trade and wage inequality," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department, Banco de Portugal, Economics and Research Department.
  2. João Amador & Luca Opromolla, 2013. "Product and destination mix in export markets," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 149(1), pages 23-53, March.
  3. Nakhoda, Aadil, 2012. "The influence of financial leverage of firms on their international trading activities," MPRA Paper 35765, University Library of Munich, Germany.
  4. Cassey Lee, . "Globalization and Wage Inequality: Firm-Level Evidence from Malaysia," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA), Economic Research Institute for ASEAN and East Asia (ERIA).
  5. Mion, Giordano & Opromolla, Luca David, 2013. "Managers’ mobility, trade performance, and wages," Working Paper Series, European Central Bank 1596, European Central Bank.

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