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The exporter wage premium when firms and workers are heterogeneous

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  • Egger, Hartmut
  • Egger, Peter
  • Kreickemeier, Udo
  • Moser, Christoph

Abstract

We set up a trade model with heterogeneous firms and a worker population that is heterogeneous in two dimensions: workers are either skilled or unskilled, and within each skill category there is a continuum of abilities. Workers with high abilities, both skilled and unskilled, are matched to firms with high productivities, and this leads to wage differentials within each skill category across firms. Self-selection of the most productive firms into exporting generates an exporter wage premium, and our framework with skilled and unskilled workers allows us to decompose this premium into its skill-specific components. We employ linked employer-employee data from Germany to structurally estimate the parameters of the model. Using these parameter estimates, we compute an average exporter wage premium of 5 percent. The decomposition by skill turns out to be quantitatively highly relevant, with exporting firms paying no wage premium at all to their unskilled workers, while the premium for skilled workers is 12 percent.

Suggested Citation

  • Egger, Hartmut & Egger, Peter & Kreickemeier, Udo & Moser, Christoph, 2017. "The exporter wage premium when firms and workers are heterogeneous," CEPIE Working Papers 12/17, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
  • Handle: RePEc:zbw:tudcep:1217
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    References listed on IDEAS

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    Cited by:

    1. Sarah Guillou & Tania Treibich, 2019. "Firm export diversification and change in workforce composition," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 645-676, November.

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    More about this item

    Keywords

    Exporter wage premium; Heterogeneous firms; Ability differences of workers; Positive assortative matching; Trade and wage inequality;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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