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Exporters and the rise in wage inequality: Evidence from German linked employer–employee data

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  • Baumgarten, Daniel

Abstract

Using a linked employer–employee data set of the German manufacturing sector, this paper analyses the role of exporting establishments in explaining rising wage dispersion both within and between skill groups in the time period 1996 to 2007. A decomposition analysis shows that the strong increase in the exporter wage gap, conditional on workers' skill levels, contributed to the growth in wage inequality, whereas the increase in the exporters' share in total employment worked towards a reduction in wage dispersion. The resulting net contribution is positive (inequality-increasing) but moderate. These findings are consistent with recent heterogeneous-firm trade models that feature an exporter wage premium as well as variability of the premium with respect to increasing trade liberalisation.

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  • 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.
    • Handle: RePEc:eee:inecon:v:90:y:2013:i:1:p:201-217
    DOI: 10.1016/j.jinteco.2012.10.001
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    More about this item

    Keywords

    Exports; Wages; Exporter wage premium; Wage inequality; Linked employer–employee data; Decomposition;
    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

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