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Exports and Wages: Rent Sharing, Workforce Composition or Returns to Skills?

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  • Macis, Mario
  • Schivardi, Fabiano

Abstract

We use linked employer-employee data from Italy to explore the relationship between exports and wages. Our empirical strategy exploits the 1992 devaluation of the Italian Lira, which represented a large and unforeseen shock to Italian firms' incentives to export. The results indicate that the export wage premium is due to exporting firms both (1) paying a wage premium above what their workers would earn in the outside labor market -- the 'rent-sharing' effect, and (2) employing workers whose skills command a higher price after the devaluation -- the ‘skill composition’ effect. The latter effect only emerges once we allow for the value of individual skills to differ in the pre- and post-devaluation periods. In fact, using a fixed measure of skills, as typically done in the literature, we would attribute the wage increase only to rent sharing. We also document that the export wage premium is larger for workers with more export-related experience. This indicates that the devaluation increased the demand for skills more useful for exporting, driving their relative price up.

Suggested Citation

  • Macis, Mario & Schivardi, Fabiano, 2012. "Exports and Wages: Rent Sharing, Workforce Composition or Returns to Skills?," CEPR Discussion Papers 8931, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8931
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    Cited by:

    1. Card, David & Cardoso, Ana Rute & Kline, Patrick, 2013. "Bargaining and the Gender Wage Gap: A Direct Assessment," IZA Discussion Papers 7592, Institute for the Study of Labor (IZA).
    2. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    3. Borrs, Linda & Knauth, Florian, 2016. "The impact of trade and technology on wage components," DICE Discussion Papers 241, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. Boris Hirsch & Steffen Müller, 2018. "Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany," CESifo Working Paper Series 6890, CESifo Group Munich.
    5. Paul Bingley & Lorenzo Cappellari, 2018. "Workers, Firms and Life-Cycle Wage Dynamics," DISCE - Working Papers del Dipartimento di Economia e Finanza def067, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Francesco Aiello & Graziella Bonanno & Alessia Via, 2015. "Again on trade elasticities: evidence from a selected sample of countries," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 259-287, December.
    7. Accetturo, Antonio & Bugamelli, Matteo & Lamorgese, Andrea R., 2013. "Skill upgrading and exports," Economics Letters, Elsevier, vol. 121(3), pages 417-420.
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    9. Italo Colantone & Alessia Matano & Paolo Naticchioni, 2018. "“New Imported Inputs, Wages and Worker Mobility”," AQR Working Papers 201804, University of Barcelona, Regional Quantitative Analysis Group, revised Apr 2018.
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    15. repec:ebd:wpaper:164 is not listed on IDEAS
    16. Valeria Gattai, 2015. "Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014)," Working Papers 300, University of Milano-Bicocca, Department of Economics, revised Apr 2015.
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    19. ITO Koji, 2017. "Wage Premium of Exporting Plants in Japan: Do plant and firm size matter?," Discussion papers 17115, Research Institute of Economy, Trade and Industry (RIETI).
    20. Francesco Aiello & Graziella Bonanno & Alessia Via, 2014. "Do Export Price Elasticities Support Tensions In Currency Markets? Evidence From China And Six Oecd Countries," Working Papers 201405, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
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    More about this item

    Keywords

    Export wage premium; Linked employer employee data;

    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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