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

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  • Chris Milner
  • Verena Tandrayen

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.

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  • Chris Milner & Verena Tandrayen, 2007. "The Impact of Exporting and Export Destination on Manufacturing Wages: Evidence for Sub‐Saharan Africa," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 13-30, February.
    • Handle: RePEc:bla:rdevec:v:11:y:2007:i:1:p:13-30
    DOI: 10.1111/j.1467-9361.2006.00353.x
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    Citations

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    Cited by:

    1. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer–Employee Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 5, pages 177-213, World Scientific Publishing Co. Pte. Ltd..
    2. Yoshino, Yutaka, 2008. "Domestic constraints, firm characteristics, and geographical diversification of firm-level manufacturing exports in Africa," Policy Research Working Paper Series 4575, The World Bank.
    3. Irene Brambilla & Nicolas Depetris Chauvin & Guido Porto, 2015. "Wage and Employment Gains from Exports: Evidence from Developing Countries," Working Papers 2015-28, CEPII research center.
    4. World Bank, 2010. "Exports, Export Destinations, and Skills," World Bank Publications - Reports 13261, The World Bank Group.
    5. Joseph Mawejje & Ibrahim Mike Okumu, 2018. "Wages and Labour Productivity in African Manufacturing," African Development Review, African Development Bank, vol. 30(4), pages 386-398, December.
    6. John Page, 2011. "Should Africa Industrialize?," WIDER Working Paper Series wp-2011-047, World Institute for Development Economic Research (UNU-WIDER).
    7. Huong Vu & Steven Lim & Mark Holmes & Tinh Doan, 2013. "Firm Exporting and Employee Benefits: First Evidence from Vietnam Manufacturing SMEs," Economics Bulletin, AccessEcon, vol. 33(1), pages 519-535.
    8. Nguyen, Thanh Quy & Nguyen, Anh Thuy & Tran, Anh Lan & Le, Hung Thai & Le, Ha Hoang Thi & Vu, Lien Phuong, 2021. "Do workers benefit from on-the-job training? New evidence from matched employer-employee data," Finance Research Letters, Elsevier, vol. 40(C).
    9. Sui Sui & Zhihao Yu, 2013. "Special Issue. Guest Editor: Zhihao Yu," Review of Development Economics, Wiley Blackwell, vol. 17(3), pages 510-522, August.
    10. Vu, Van Huong, 2012. "Does export participation affect wages and employment quality? the case of Vietnamese SMEs," MPRA Paper 38696, University Library of Munich, Germany.
    11. John Page, 2009. "Africa's Growth Turnaround," World Bank Publications - Books, The World Bank Group, number 28026.
    12. Feicheng Wang & Chris Milner & Juliane Scheffel, 2018. "Globalization and inter‐industry wage differentials in China," Review of International Economics, Wiley Blackwell, vol. 26(2), pages 404-437, May.
    13. James E. Anderson, 2008. "Globalization and Income Distribution: A Specific Factors Continuum Approach," Boston College Working Papers in Economics 699, Boston College Department of Economics.
    14. Page, John, 2011. "Should Africa Industrialize?," WIDER Working Paper Series 047, World Institute for Development Economic Research (UNU-WIDER).
    15. Gnangnon, Sèna Kimm, 2021. "Do Unilateral Trade Preferences Help Reduce Poverty in Beneficiary Countries?," EconStor Preprints 247346, ZBW - Leibniz Information Centre for Economics.
    16. Marianne Matthee & Neil Rankin & Carli Bezuidenhout, 2017. "Labour demand and the distribution of wages in South African manufacturing exporters," WIDER Working Paper Series wp-2017-11, World Institute for Development Economic Research (UNU-WIDER).
    17. Feicheng Wang & Chris Milner & Juliane Scheffel, 2022. "Export destination and the skill premium: Evidence from Chinese manufacturing industries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 1057-1094, May.
    18. Mita Bhattacharya & Kien Trung Nguyen, 2019. "Trade liberalization and the wage–skill premium: Evidence from Vietnamese manufacturing," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(2), pages 519-540, February.
    19. Sèna Kimm Gnangnon, 2024. "Export product quality and inclusivity in developing countries," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(3), pages 807-843, July.
    20. Devadason, Evelyn, 2007. "Do Trading Partners Matter for Labour Market Inequality? The Malaysian Case," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 3(1-2), pages 1-14.
    21. Marianne Matthee & Neil Rankin & Carli Bezuidenhout, 2017. "Labour demand and the distribution of wages in South African manufacturing exporters," WIDER Working Paper Series 011, World Institute for Development Economic Research (UNU-WIDER).

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