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Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels

  • Pedro Martins
  • Luca David Opromolla

We investigate the relationship between exporting, importing, and wage premia using a rich matched employer-employee data set. We improve on the previous literature (i) by using a new methodology to quantify the contribution of an extensive set of worker- and rm-level observable and� unobservable characteristics to the wage gap, and (ii) by controlling for the import as well as the export activity of the firm. These two innovations allow us to avoid large biases that characterized the previous literature. A robust result is that the hiring policy of exporters is quite different than the one of importers. While firm size and sales are, to different extents, important components of the wage gap both for exporters and importers, importers hire workers that are overwhelmingly more able than the average. Workers at exporting firms, on the contrary, are no different in terms of unobserved time-invariant characteristics.Our analysis provides a useful guidance for recent theories that aim at explaining participation both in export and import markets and at including non-neoclassical labor market features into trade models.

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Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w201123.

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Date of creation: 2011
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Handle: RePEc:ptu:wpaper:w201123
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  1. Andrew B. Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2007. "Firms in International Trade," CEP Discussion Papers dp0795, Centre for Economic Performance, LSE.
  2. 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.
  3. Ana Rute Cardoso & Pedro Portugal, 2005. "Contractual Wages and the Wage Cushion under Different Bargaining Settings," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 875-902, October.
  4. Mirabelle Muuls & Mauro Pisu, 2007. "Imports and exports at the level of the firm: evidence from Belgium," LSE Research Online Documents on Economics 19711, London School of Economics and Political Science, LSE Library.
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  9. Irarrazabal, Alfonso & Moxnes, Andreas & Opromolla, Luca David, 2009. "The Margins of Multinational Production and the Role of Intra-firm trade," CEPR Discussion Papers 7145, C.E.P.R. Discussion Papers.
  10. Pinelopi Koujianou Goldberg & Amit Kumar Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1727-1767, November.
  11. Laszlo Halpern & Miklos Koren & Adam Szeidl, 2005. "Import and Productivity," IEHAS Discussion Papers 0509, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  12. Jan De Loecker, 2004. "Do Exports Generate Higher Productivity? Evidence from Slovenia," LICOS Discussion Papers 15104, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  13. Carlo Altomonte & Gábor Békés, 2010. "Trade Complexity and Productivity," CeFiG Working Papers 12, Center for Firms in the Global Economy, revised 25 Oct 2010.
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  16. Pedro S. Martins, 2008. "Dismissals for cause: The difference that just eight paragraphs can make," Working Papers 24, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  17. Munch, Jakob Roland & Skaksen, Jan Rose, 2008. "Human capital and wages in exporting firms," Journal of International Economics, Elsevier, vol. 75(2), pages 363-372, July.
  18. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, vol. 67(2), pages 373-391, December.
  19. Hartmut Egger & Udo Kreickemeier, 2007. "Firm Heterogeneity and the Labour Market Effects of Trade Liberalisation," CESifo Working Paper Series 2000, CESifo Group Munich.
  20. Kasahara, Hiroyuki & Rodrigue, Joel, 2008. "Does the use of imported intermediates increase productivity? Plant-level evidence," Journal of Development Economics, Elsevier, vol. 87(1), pages 106-118, August.
  21. Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2011. "Globalization and labor market outcomes: Wage bargaining, search frictions, and firm heterogeneity," Munich Reprints in Economics 20471, University of Munich, Department of Economics.
  22. Carneiro, Anabela & Guimaraes, Paulo & Portugal, Pedro, 2009. "Real Wages and the Business Cycle: Accounting for Worker and Firm Heterogeneity," IZA Discussion Papers 4174, Institute for the Study of Labor (IZA).
  23. Iacovone, Leonardo & Javorcik, Beata S., 2008. "Multi-product exporters : diversification and micro-level dynamics," Policy Research Working Paper Series 4723, The World Bank.
  24. Alfonso Irarrazabal & Andreas Moxnes & Karen Helene Ulltveit-Moe, 2013. "Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 839-849, July.
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