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The Impact of Exporting and Export Destination on Manufacturing Wages: Evidence for Sub-Saharan Africa

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  • Chris Milner
  • Verena Tandrayen

Abstract

This paper investigates wage effects of trade status of African firms. Using data for manufacturing firms, we find a positive overall association between individual earnings and export status. Moreover, the skill wage premium in exporting firms is significantly higher. These results are consistent with either trade inducing higher wages in the exporting country, or with more productive (higher wage) firms self-selecting into exporting. The results are not robust, however, to disaggregation by export destination. Exporting to outside Africa generates a negative wage premium whereas exporting to African markets yields a positive premium in export firms of the exporting country. This suggests that there is a disciplining effect on the wages of exporting firms only when exporting is to more competitive markets. Copyright © 2006 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Chris Milner & Verena Tandrayen, 2007. "The Impact of Exporting and Export Destination on Manufacturing Wages: Evidence for Sub-Saharan Africa," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 13-30, February.
  • Handle: RePEc:bla:rdevec:v:11:y:2007:i:1:p:13-30
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    References listed on IDEAS

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    1. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584-584.
    2. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, January.
    3. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, pages 65-99.
    4. Takatoshi Ito & Peter Isard & Steven Symansky, 1999. "Economic Growth and Real Exchange Rate: An Overview of the Balassa-Samuelson Hypothesis in Asia," NBER Chapters,in: Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues (NBER-EASE volume 7), pages 109-132 National Bureau of Economic Research, Inc.
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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. repec:wsi:wschap:9789813109698_0005 is not listed on IDEAS
    3. Yoshino, Yutaka, 2008. "Domestic constraints, firm characteristics, and geographical diversification of firm-level manufacturing exports in Africa," Policy Research Working Paper Series 4575, The World Bank.
    4. repec:wbk:wbpubs:28026 is not listed on IDEAS
    5. Chris Milner & Juliane Scheffel & Feicheng Wang, 2016. "Globalisation and Inter-Industry Wage Differentials in China," Discussion Papers 2016-02, University of Nottingham, GEP.
    6. Tarasov, Alexander & Felbermayr, Gabriel, 2014. "Trade and the Spatial Distribution of Transport Infrastructure," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100511, Verein für Socialpolitik / German Economic Association.
    7. James E. Anderson, 2008. "Globalization and Income Distribution: A Specific Factors Continuum Approach," Boston College Working Papers in Economics 699, Boston College Department of Economics.
    8. Page, John, 2011. "Should Africa Industrialize?," WIDER Working Paper Series 047, World Institute for Development Economic Research (UNU-WIDER).
    9. World Bank, 2010. "Exports, Export Destinations, and Skills," World Bank Other Operational Studies 13261, The World Bank.
    10. 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..
    11. Huong Vu & Steven Lim & Mark Holmes & Tinh Doan, 2013. "Firm Exporting and Employee Benefits: First Evidence from Vietnam Manufacturing SMEs," Economics Bulletin, AccessEcon, pages 519-535.
    12. Devadason, Evelyn, 2007. "Do Trading Partners Matter for Labour Market Inequality? The Malaysian Case," Review of Applied Economics, Review of Applied Economics, vol. 3(1-2).
    13. Marianne Matthee & Neil Rankin & Carli Bezuidenhout, 2017. "Labour demand and the distribution of wages in South African manufacturing exporters," WIDER Working Paper Series 011, World Institute for Development Economic Research (UNU-WIDER).

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