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

Abstract

This paper draws on employer-employee and longitudinal plant data from Mexico to investigate the impact of exports on wage premia, 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 premia. 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 premia, and that the effect on wage premia accounts for essentially all of the medium-term effect of exporting on plant-average wages.

New Perspectives on Inequality in Latin America

“…There are also sizable e↵ects of trade on inequality through the mechanism of firm selection into export markets. Consistent with this story, Frías et al (2022) find that exports have a significant positive e↵ect on plant-level wage premiums in Mexico. However, this might not be the full story.…”

Do Exporters Import Gender Inequality?

“…In a broader sense, our paper also connects to the literature on gender inequality in the labor market(Altonji and Blank, 1999;Blau and Kahn, 2000;Goldin, 2014), the literature on di↵erences in psychological attributes and bargaining power across genders(Olivetti and Petrongolo, 2016;Card et al, 2016;Blau and Kahn, 2017), the literature on globalization and wages(Helpman et al, 2010;Akerman et al, 2013;Autor et al, 2013;Helpman et al, 2017), as well as to the literature on exporting and wages(Bernard and Jensen, 1995;Bernard and Bradford Jensen, 1999;Schank et al, 2007;Munch and Skaksen, 2008;Irarrazabal et al, 2013;Krishna et al, 2014;Macis and Schivardi, 2016;Barth et al, 2016;Helpman et al, 2017;Bødker et al, 2018;Frías et al, 2022).…”

Trade, GVCs, and wage inequality: Theoretical and empirical insights

“…Alternative structures are also examined. Frías et al (2009) find that nearly all the differential within-industry wage change due to an export shock is explained by changes in wage premia, rather than skill composition; thereby pointing to 25. See Schank et al, (2007) for a review of firm-level studies on the export wage premium.…”