The Impact of Exporting and Export Destination on Manufacturing Wages: Evidence for Sub‐Saharan Africa

Chris Milner and Verena Tandrayen Ragoobur

Review of Development Economics, 2007, vol. 11, issue 1, 13-30

Abstract: This paper investigates wage effects of trade status of African firms. Using data for manufacturing firms, we find a positive overall association between individual earnings and export status. Moreover, the skill wage premium in exporting firms is significantly higher. These results are consistent with either trade inducing higher wages in the exporting country, or with more productive (higher wage) firms self‐selecting into exporting. The results are not robust, however, to disaggregation by export destination. Exporting to outside Africa generates a negative wage premium whereas exporting to African markets yields a positive premium in export firms of the exporting country. This suggests that there is a disciplining effect on the wages of exporting firms only when exporting is to more competitive markets.

Date: 2007
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