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The Exporter Wage Premium When Firms and Workers Are Heterogeneous

Hartmut Egger, Peter Egger (), Udo Kreickemeier () and Christoph Moser

No 12162, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Ability differences; Exporter wage premium; Heterogeneous Firms (search for similar items in EconPapers)
JEL-codes: C31 F12 F15 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-int and nep-lma
Date: 2017-07
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