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

  • Mario Macis

    (Johns Hopkins University and IZA)

  • Fabiano Schivardi

    (University of Cagliari, EIEF and CEPR)

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 com- mand 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.

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File URL: http://www.eief.it/files/2012/09/wp-05-exports-and-wages_rent-sharing-workforce-composition-or-returns-to-skills.pdf
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Paper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 1205.

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Length: 41 pages
Date of creation: 2012
Date of revision: Mar 2012
Handle: RePEc:eie:wpaper:1205
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  1. Albert Park & Dean Yang & Xinzheng Shi & Yuan Jiang, 2010. "Exporting and Firm Performance: Chinese Exporters and the Asian Financial Crisis," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 822-842, November.
  2. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
  3. Judith A. Frias & David S. Kaplan & Eric Verhoogen, 2012. "Exports and Within-Plant Wage Distributions: Evidence from Mexico," American Economic Review, American Economic Association, vol. 102(3), pages 435-40, May.
  4. Hartmut Egger & Udo Kreickemeier, 2009. "Firm Heterogeneity And The Labor Market Effects Of Trade Liberalization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 187-216, 02.
  5. Maurice Kugler & Eric Verhoogen, 2012. "Prices, Plant Size, and Product Quality," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 307-339.
  6. Matteo Bugamelli & Fabiano Schivardi & Roberta Zizza, 2010. "The euro and Firm Restructuring," Working Papers CELEG 1001, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  7. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2006. "Do exporters really pay higher wages? First evidence from German linked employer-employee data," Working Paper Series in Economics 28, University of Lüneburg, Institute of Economics.
  8. Helpman, Elhanan & Itskhoki, Oleg, 2009. "Labor Market Rigidities, Trade, and Unemployment," CEPR Discussion Papers 7502, C.E.P.R. Discussion Papers.
  9. Luigi Guiso & Fabiano Schivardi, 2007. "Spillovers in Industrial Districts," Economic Journal, Royal Economic Society, vol. 117(516), pages 68-93, 01.
  10. A. Kerem Cosar & Nezih Guner & James Tybout, 2013. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," Working Papers 732, Barcelona Graduate School of Economics.
  11. Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 247-285, 04.
  12. Mion, Giordano & Opromolla, Luca David, 2011. "Managers' Mobility, Trade Status, and Wages," CEPR Discussion Papers 8230, C.E.P.R. Discussion Papers.
  13. Elhanan Helpman & Oleg Itskhoki & Marc-Andreas Muendler & Stephen J. Redding, 2012. "Trade and Inequality: From Theory to Estimation," NBER Working Papers 17991, National Bureau of Economic Research, Inc.
  14. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, vol. 101(1), pages 304-40, February.
  15. Baumgarten, Daniel, 2013. "Exporters and the rise in wage inequality: Evidence from German linked employer-employee data," Munich Reprints in Economics 20146, University of Munich, Department of Economics.
  16. repec:rwi:repape:0217 is not listed on IDEAS
  17. Pravin Krishna & Jennifer P. Poole & Mine Zeynep Senses, 2011. "Wage Effects of Trade Reform with Endogenous Worker Mobility," NBER Working Papers 17256, National Bureau of Economic Research, Inc.
  18. Finicelli, Andrea & Liccardi, Alessandra & Sbracia, Massimo, 2005. "A New Indicator of Competitiveness for Italy and the Main Industrial and Emerging Countries," MPRA Paper 4703, University Library of Munich, Germany.
  19. 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.
  20. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
  21. Krishna, Pravin & Poole, Jennifer P. & Senses, Mine Zeynep, 2011. "Trade liberalization, firm heterogeneity, and wages : new evidence from matched employer-employee data," Policy Research Working Paper Series 5711, The World Bank.
  22. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
  23. Davide Castellani & Francesco Serti & Chiara Tomasi, 2008. "Firms in International Trade: Importers and Exporters Heterogeneity in the Italian Manufacturing Industry," LEM Papers Series 2008/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
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