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Firms’ Main Market, Human Capital, and Wages

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Author Info
Alcala Agullo, Francisco
Hernández Martínez, Pedro Jesús (Departamentos y Servicios::Departamentos de la UMU::Fundamentos del Análisis Económico)

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Abstract

This paper contributes to the recent literature on the exporter wage premium. The literature has focused on an exporter/non-exporter dichotomy. Instead, this paper provides first evidence that there is a more continuous destination-market effect. Using Spanish data, we estimate wage premia for establishments selling to the national, European Union, and rest of the world markets (wages in local-market establishments are the reference). Controlling for worker and establishment characteristics, output-market wage premia are increasing in market remoteness and employee education. Establishment human capital is also increasing in output-market remoteness. On the theoretical side, the paper builds a model predicting that firms selling to more-remote markets employ higher human capital and pay higher wages to employees within each education group. The channel linking these variables is firms’ endogenous choice of quality. The model provides a potential explanation for the empirical results in the paper, which is consistent with the evidence on the positive relationship between output-market remoteness and quality of exports put forward by recent trade literature..

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Publisher Info
Paper provided by Murcia University, DIGITUM. Universidad de Murcia in its series Annals of Computational Economics with number 4102.

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Length: 29
Date of creation: Dec 2006
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Handle: RePEc:mur:wpaper:4102

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Related research
Keywords: wage inequality; international trade; Alchian-Allen effect; vertical differentiation;

Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  1. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 489-530, 05. [Downloadable!] (restricted)
    Other versions:
  2. Murphy, Kevin M. & Shleifer, Andrei, 1997. "Quality and trade," Journal of Development Economics, Elsevier, vol. 53(1), pages 1-15, June. [Downloadable!] (restricted)
    Other versions:
  3. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2004. "Dissecting trade: firms, industries, and export destinations," Staff Report 332, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  4. Bernard, Andrew B. & Jensen, J. Bradford, 1997. "Exporters, skill upgrading, and the wage gap," Journal of International Economics, Elsevier, vol. 42(1-2), pages 3-31, February. [Downloadable!] (restricted)
    Other versions:
  5. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "The Establishment-Size Wage Premium: Evidence from European Countries," IZA Discussion Papers 1569, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February. [Downloadable!] (restricted)
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  7. Maurin, Eric & Thesmar, David & Thoenig, Mathias, 2002. "Globalization and the demand for skill: An Export Based Channel," CEPR Discussion Papers 3406, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
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  9. Todd L. Idson & Walter Y. Oi, 1999. "Workers Are More Productive in Large Firms," American Economic Review, American Economic Association, vol. 89(2), pages 104-108, May. [Downloadable!] (restricted)
  10. Battu, Harminder & Belfield, Clive R. & Sloane, Peter J., 2001. "Human Capital Spill-Overs Within the Workplace," IZA Discussion Papers 404, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Andrew Bernard & Joachim Wagner, 1997. "Exports and success in German manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(1), pages 134-157, March. [Downloadable!] (restricted)
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  12. Amit Khandelwal, 2009. "The Long and Short (of) Quality Ladders," NBER Working Papers 15178, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2008. "Higher Wages in Exporting Firms: Self-Selection, Export Effect, or Both? First Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 3359, Institute for the Study of Labor (IZA). [Downloadable!]
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  14. Munch, Jakob Roland & Rose Skaksen, Jan, 2009. "Human Capital and Wages in Exporting Firms," Working Papers 09-2006, Copenhagen Business School, Department of Economics. [Downloadable!]
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  15. Michael Baker & Nicole M. Fortin, 2001. "Occupational gender composition and wages in Canada, 1987-1988," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 345-376, May. [Downloadable!] (restricted)
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  16. David Card & Sara de la Rica, 2004. "The effect of firm-level contracts on the structure of wages: evidence from matched .," DFAEII Working Papers 200406, University of the Basque Country - Department of Foundations of Economic Analysis II, revised 15 Nov 2006. [Downloadable!]
  17. Mahmood Arai, 2003. "Wages, Profits, and Capital Intensity: Evidence from Matched Worker-Firm Data," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 593-618, July. [Downloadable!]
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  18. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November. [Downloadable!] (restricted)
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  19. Stokey, Nancy L, 1991. "The Volume and Composition of Trade between Rich and Poor Countries," Review of Economic Studies, Blackwell Publishing, vol. 58(1), pages 63-80, January. [Downloadable!] (restricted)
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  20. Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2008. "Specialization across varieties and North-South competition," Economic Policy, CEPR, CES, MSH, vol. 23, pages 51-91, 01. [Downloadable!] (restricted)
  21. Dolado, Juan J. & Felgueroso, Florentino & Jimeno, Juan F., 2000. "Youth labour markets in Spain: Education, training, and crowding-out," European Economic Review, Elsevier, vol. 44(4-6), pages 943-956, May. [Downloadable!] (restricted)
  22. Manasse, Paolo & Turrini, Alessandro, 2001. "Trade, wages, and 'superstars'," Journal of International Economics, Elsevier, vol. 54(1), pages 97-117, June. [Downloadable!] (restricted)
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  23. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June. [Downloadable!]
  24. Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2007. "Do exporters really pay higher wages? First evidence from German linked employer-employee data," Journal of International Economics, Elsevier, vol. 72(1), pages 52-74, May. [Downloadable!] (restricted)
    Other versions:
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