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Exporters and Wage Inequality during the Great Recession - Evidence from Germany

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  • Wolfgang Dauth
  • Hans-Joerg Schmerer
  • Erwin Winkler

Abstract

We analyze the evolution of the exporter wage premium (EWP) during the Great Recession and the resulting impact on wage inequality in Germany. Our results show that the EWP declined sharply between 2007 and 2008 and stagnated afterwards. This pattern is due to exporters starting to adjust their wage-setting one year earlier than non-exporters, likely due to the sharp decrease of foreign orders starting in late 2007. Finally, our decomposition shows that the fall of the EWP had a notable negative and persistent eect on wage inequality.

Suggested Citation

  • Wolfgang Dauth & Hans-Joerg Schmerer & Erwin Winkler, 2015. "Exporters and Wage Inequality during the Great Recession - Evidence from Germany," Working Papers 158, Bavarian Graduate Program in Economics (BGPE).
  • Handle: RePEc:bav:wpaper:158_dauthschmererwinkler
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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..
    4. 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..
    5. Thomas Lemieux, 2002. "Decomposing changes in wage distributions: a unified approach," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(4), pages 646-688, November.
    6. Hauptmann, Andreas & Schmerer, Hans-Jörg, 2013. "Do exporters pay fair-wage premiums?," Economics Letters, Elsevier, vol. 121(2), pages 179-182.
    7. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    Cited by:

    1. Daniel Baumgarten & Gabriel Felbermayr & Sybille Lehwald, 2020. "Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 85-122, January.
    2. Niamh Holton & Donal O'Neill, 2017. "The Changing Nature of Irish Wage Inequality from Boom to Bust," The Economic and Social Review, Economic and Social Studies, vol. 48(1), pages 1-26.

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    More about this item

    Keywords

    exporter wage premium; wage-inequality; Great Recession; international trade; matched employer-employee data;
    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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