IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/32721.html
   My bibliography  Save this paper

Exporting wage premium in the exporting sector: evidence from manufacturing firms in China

Author

Listed:
  • Fu, Dahai
  • Wu, Yanrui

Abstract

This paper investigates whether exporting firms pay average higher wages than non-exporting firms by analyzing a large sample of Chinese manufacturing firms in 2004. Through rigorous exercises involving robust regressions, quantile regressions and nonparametric matching estimators, we find that the wage premium of exporting activities is not a prevailing phenomenon in China. It is unevenly distributed among firms with different ownerships, export-orientations and locations. Overall, exporters located in coastal regions but Guangdong province are more likely to pay higher average wages than nonexporters, while those producing in Guangdong offer a lower pay.

Suggested Citation

  • Fu, Dahai & Wu, Yanrui, 2011. "Exporting wage premium in the exporting sector: evidence from manufacturing firms in China," MPRA Paper 32721, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32721
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/32721/2/MPRA_paper_32721.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/32851/1/MPRA_paper_32851.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 255-283.
    2. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 489-530.
    3. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    4. Andrew Bernard & Joachim Wagner, 1997. "Exports and success in German manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(1), pages 134-157, March.
    5. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, vol. 65(1), pages 1-20, January.
    6. Munch, Jakob Roland & Skaksen, Jan Rose, 2008. "Human capital and wages in exporting firms," Journal of International Economics, Elsevier, vol. 75(2), pages 363-372, July.
    7. Sjoholm, Fredrik & Lipsey, Robert E, 2006. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 201-221, October.
    8. Chunlai Chen, 2011. "Foreign Direct Investment in China," Books, Edward Elgar Publishing, number 14100.
    9. Hartmut Egger & Udo Kreickemeier, 2017. "Firm Heterogeneity and the Labor Market Effects of Trade Liberalization," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 10, pages 265-306, World Scientific Publishing Co. Pte. Ltd..
    10. Buckley, Peter J. & Wang, Chengqi & Clegg, Jeremy, 2007. "The impact of foreign ownership, local ownership and industry characteristics on spillover benefits from foreign direct investment in China," International Business Review, Elsevier, vol. 16(2), pages 142-158, April.
    11. Chen, Zhihong & Ge, Ying & Lai, Huiwen, 2011. "Foreign Direct Investment and Wage Inequality: Evidence from China," World Development, Elsevier, vol. 39(8), pages 1322-1332, August.
    12. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2010. "Inequality and Unemployment in a Global Economy," Econometrica, Econometric Society, vol. 78(4), pages 1239-1283, July.
    13. Sébastien Breau & David L. Rigby, 2006. "Is There Really an Export Wage Premium? A Case Study of Los Angeles Using Matched Employee-Employer Data," Working Papers 06-06, Center for Economic Studies, U.S. Census Bureau.
    14. Hansson, Pär & Lundin, Nan Nan, 2003. "Exports as an Indicator on or Promoter of Successful Swedish Manufacturing Firms in the 1990s," Working Paper Series 189, Trade Union Institute for Economic Research.
    15. Davis, Donald R. & Harrigan, James, 2011. "Good jobs, bad jobs, and trade liberalization," Journal of International Economics, Elsevier, vol. 84(1), pages 26-36, May.
    16. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    17. David Greenaway & Zhihong Yu, 2004. "Firm-level interactions between exporting and productivity: Industry-specific evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(3), pages 376-392, September.
    18. 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.
    19. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    20. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer–Employee Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 5, pages 177-213, World Scientific Publishing Co. Pte. Ltd..
    21. Roberto Alvarez & Ricardo A. López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(4), pages 1384-1400, November.
    22. 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.
    23. Zhao, Yaohui, 2001. "Foreign direct investment and relative wages: The case of China," China Economic Review, Elsevier, vol. 12(1), pages 40-57.
    24. Meng‐Wen Tsou & Jin‐Tan Liu & Cliff J. Huang, 2006. "Export Activity, Firm Size and Wage Structure: Evidence from Taiwanese Manufacturing Firms," Asian Economic Journal, East Asian Economic Association, vol. 20(4), pages 333-354, December.
    25. Kang-Shik Choi & Jinook Jeong, 2007. "Does unmeasured ability explain the wage premium associated with technological change?: Quantile regression analysis," Applied Economics, Taylor & Francis Journals, vol. 39(9), pages 1163-1171.
    26. Adrian Wood, 2002. "Globalization and wage inequalities: A synthesis of three theories," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(1), pages 54-82, March.
    27. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    28. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fu, Dahai & Wu, Yanrui, 2013. "Export wage premium in China's manufacturing sector: A firm level analysis," China Economic Review, Elsevier, vol. 26(C), pages 182-196.
    2. Nicola Gagliardi & Benoît Mahy & François Rycx, 2020. "Trade, GVCs, and wage inequality: Theoretical and empirical insights," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 115-134.
    3. Gnangnon, Sèna Kimm, 2020. "Aid for Trade flows and Wage Inequality in the manufacturing sector of recipient-countries," EconStor Preprints 213936, ZBW - Leibniz Information Centre for Economics.
    4. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2010. "Inequality and Unemployment in a Global Economy," Econometrica, Econometric Society, vol. 78(4), pages 1239-1283, July.
    5. Krishna, Pravin & Poole, Jennifer P. & Senses, Mine Zeynep, 2014. "Wage Effects of Trade Reform with Endogenous Worker Mobility," Journal of International Economics, Elsevier, vol. 93(2), pages 239-252.
    6. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2012. "The Empirics of Firm Heterogeneity and International Trade," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 283-313, July.
    7. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Higher Wages in Exporting Firms: Self-selection, Export Effect, or Both? First Evidence from Linked Employer–Employee Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 6, pages 215-241, World Scientific Publishing Co. Pte. Ltd..
    8. Araújo, Bruno César & Paz, Lourenço S., 2014. "The effects of exporting on wages: An evaluation using the 1999 Brazilian exchange rate devaluation," Journal of Development Economics, Elsevier, vol. 111(C), pages 1-16.
    9. 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," Discussion Papers 55, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    10. Irene Brambilla & Nicolas Depetris Chauvin & Guido Porto, 2015. "Wage and Employment Gains from Exports: Evidence from Developing Countries," Working Papers 2015-28, CEPII research center.
    11. Irene Brambilla & Nicolas Depetris Chauvin & Guido Porto, 2017. "Examining the Export Wage Premium in Developing Countries," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 447-475, August.
    12. 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.
    13. Klein, Michael W. & Moser, Christoph & Urban, Dieter M., 2013. "Exporting, skills and wage inequality," Labour Economics, Elsevier, vol. 25(C), pages 76-85.
    14. Michael W. Klein & Christoph Moser & Dieter M. Urban, 2010. "The Contribution of Trade to Wage Inequality: The Role of Skill, Gender, and Nationality," NBER Working Papers 15985, National Bureau of Economic Research, Inc.
    15. Baumgarten, Daniel, 2013. "Exporters and the rise in wage inequality: Evidence from German linked employer–employee data," Journal of International Economics, Elsevier, vol. 90(1), pages 201-217.
    16. repec:zbw:rwirep:0217 is not listed on IDEAS
    17. Kong, Dongmin & Kong, Gaowen & Pang, Lirang & Zhang, Jian, 2018. "Who gets the wage premium from export: Top managers or employees?," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 356-370.
    18. Daniel Baumgarten, 2010. "Exporters and the Rise in Wage Inequality – Evidence from German Linked Employer-Employee Data," Ruhr Economic Papers 0217, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    19. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2018. "Global Firms," Journal of Economic Literature, American Economic Association, vol. 56(2), pages 565-619, June.
    20. Unjung Whang, 2016. "Skilled-Labor Intensity Differences Across Firms, Endogenous Product Quality, and Wage Inequality," Open Economies Review, Springer, vol. 27(2), pages 251-292, April.
    21. Hartmut Egger & Udo Kreickemeier, 2017. "Fairness, Trade, and Inequality," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 12, pages 339-380, World Scientific Publishing Co. Pte. Ltd..

    More about this item

    Keywords

    Exporters; Wage premium; Manufacturing; China;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:32721. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.