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Is There Really an Export Wage Premium? A Case Study of Los Angeles Using Matched Employee-Employer Data

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  • S�bastien Breau
  • David L. Rigby

Abstract

This paper investigates the effects of exporting on wages, specifically the claim that workers are paid higher wages if they are employed in manufacturing plants that export vis-�-vis plants that do not export. Past research on US plants has supported the existence of an export wage premium, though European studies dispute those results calling for more care in econometric investigation to control for worker characteristics. We answer this call developing a matched employee-employer data set linking worker characteristics from the one-in-six long form of the Decennial Household Census to manufacturing establishment data from the Longitudinal Research Database. Analysis focuses on 1990 and 2000 data for the Los Angeles Consolidated Metropolitan Statistical Area. Our results confirm that the average wage in manufacturing plants that export is greater than that in manufacturing plants that do not export. However, after controlling for worker characteristics such as age, gender, education, race and nationality, the export wage premium vanishes. That is, when comparing workers with similar characteristics, there is no wage difference between exporting and non-exporting plants. These results concord with recent findings from Europe and elsewhere.

Suggested Citation

  • S�bastien Breau & David L. Rigby, 2006. "Is There Really an Export Wage Premium? A Case Study of Los Angeles Using Matched Employee-Employer Data," Working Papers 06-06, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:06-06
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    Cited by:

    1. Sébastien Breau & David L. Rigby, 2010. "International trade and wage inequality in Canada," Journal of Economic Geography, Oxford University Press, vol. 10(1), pages 55-86, January.
    2. 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.
    3. Antoni, Manfred & Janser, Markus & Lehmer, Florian, 2015. "The hidden winners of renewable energy promotion: Insights into sector-specific wage differentials," Energy Policy, Elsevier, vol. 86(C), pages 595-613.
    4. Beatriz Muriel, 2011. "Rethinking Earnings Determinants in the Urban Areas of Bolivia," Development Research Working Paper Series 06/2011, Institute for Advanced Development Studies.
    5. Beatriz Muriel Hernández, 2016. "An Analysis of Firm Characteristics as Earnings Determinants: The Urban Bolivia Case," Development Research Working Paper Series 04/2016, Institute for Advanced Development Studies.
    6. Fu, Dahai & Wu, Yanrui, 2013. "Export wage premium in China's manufacturing sector: A firm level analysis," China Economic Review, Elsevier, vol. 26(C), pages 182-196.
    7. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2008. "Higher Wages in Exporting Firms: Self-selection, Export Effect, or Both? First Evidence from German Linked Employer-Employee Data," Working Paper Series in Economics 74, University of Lüneburg, Institute of Economics.
    8. Joachim Wagner, 2016. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 2, pages 43-87, World Scientific Publishing Co. Pte. Ltd..
    9. repec:idb:brikps:359 is not listed on IDEAS
    10. Nicola Gagliardi & Benoît Mahy & François Rycx, 2020. "Trade, GVCs, and wage inequality: Theoretical and empirical insights," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 115-134.
    11. Néstor Gandelman & Verónica Alaimo & Marcelo Olarreaga & José Luis Guasch & Daniel Lederman & Carlos Casacuberta & Ana María Oviedo & J. Humberto López & Inessa Love & Guido Porto & Pablo Fajnzylber &, 2009. "Does the Investment Climate Matter?: Microeconomic Foundations of Growth in Latin America," IDB Publications (Books), Inter-American Development Bank, number 60058 edited by José Luis Guasch & J. Humberto López & Pablo Fajnzylber, February.
    12. Julie A. Silva, 2008. "International Trade and the Changing Demand for Skilled Workers in High‐Tech Manufacturing," Growth and Change, Wiley Blackwell, vol. 39(2), pages 225-251, June.
    13. Max Nathan & Neil Lee, 2013. "Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London," Economic Geography, Clark University, vol. 89(4), pages 367-394, October.
    14. Rigby, D L & Breau, Sebastien, 2007. "Impacts of Trade on Wage Quality in Los Angeles: Analysis Using Matched Employer-Employee Data," Center for Global, International and Regional Studies, Working Paper Series qt0fh5z1hf, Center for Global, International and Regional Studies, UC Santa Cruz.
    15. World Bank, 2007. "Economic Performance in Latin America and the Caribbean : A Microeconomic Perspective," World Bank Publications - Reports 7857, The World Bank Group.
    16. Carli Bezuidenhout & Marianne Matthee & Neil Rankin, 2021. "Exporting and the wage premium: The case of South African manufacturing firms," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2031-2051, November.
    17. 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.
    18. David Rigby & Sebastien Breau, 2006. "Impacts of Trade on Wage Inequality in Los Angeles: Analysis Using Matched Employer-Employee Data," Working Papers 06-12, Center for Economic Studies, U.S. Census Bureau.
    19. Pablo Fajnzylber & J. Luis Guasch & J. Humberto López, 2009. "Does the Investment Climate Matter? Microeconomic Foundations of Growth in Latin America," World Bank Publications - Books, The World Bank Group, number 6300.
    20. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Higher Wages in Exporting Firms: Self-selection, Export Effect, or Both? First Evidence from Linked Employer–Employee Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 6, pages 215-241, World Scientific Publishing Co. Pte. Ltd..
    21. Fu, Dahai & Wu, Yanrui, 2011. "Exporting wage premium in the exporting sector: evidence from manufacturing firms in China," MPRA Paper 32721, University Library of Munich, Germany.
    22. Shay Tsur, 2021. "Why Do Exporters Pay Higher Wages? Empirical Evidence From Israeli Companies," Israel Economic Review, Bank of Israel, vol. 19(1), pages 1-30.
    23. Gandelman, Néstor & Alaimo, Veronica & Olarreaga, Marcelo & Guasch, José Luis & Lederman, Daniel & Casacuberta, Carlos & Oviedo, Ana María & López, J. Humberto & Love, Inessa & Porto, Guido & Fajnzylb, 2009. "Does the Investment Climate Matter?: Microeconomic Foundations of Growth in Latin America," IDB Publications (Books), Inter-American Development Bank, number 359, November.
    24. Kong, Dongmin & Kong, Gaowen & Pang, Lirang & Zhang, Jian, 2018. "Who gets the wage premium from export: Top managers or employees?," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 356-370.
    25. Richard G Funderburg & Xiaoxue Zhou, 2013. "Trading Industry Clusters amid the Legacy of Industrial Land-Use Planning in Southern California," Environment and Planning A, , vol. 45(11), pages 2752-2770, November.

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