Exports and Wage Premiums: Evidence from Mexican Employer-Employee Data

Judith A. Frías, David S. Kaplan, Eric Verhoogen and David Alfaro-Serrano
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Judith A. Frías: Consejo de la Judicatura Federal
David S. Kaplan: Inter-American Development Bank
David Alfaro-Serrano: Cornerstone Research

The Review of Economics and Statistics, 2024, vol. 106, issue 2, 305-321

Abstract: This paper draws on employer-employee and longitudinal plant data from Mexico to investigate the impact of exports on wage premiums, defined as wages above what workers would receive elsewhere in the labor market. We decompose plant-level average wages into a component reflecting skill composition and a component reflecting wage premiums. Using the late-1994 peso devaluation interacted with initial export propensity as a source of exogenous changes in exports, we find that exports have a significant positive effect on wage premiums and that the effect on wage premiums accounts for essentially all of the medium-term effect of exporting on plant-average wages.

Date: 2024
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