Firms’ main market, human capital, and wages

Abstract

The literature on the exporter wage premium has focused on an exporter/non-exporter dichotomy. Instead, this paper provides first evidence that there is a more continuous destination-market effect. Using Spanish data, we estimate wage premia for establishments selling to the national, European Union, and rest of the world markets (with respect to wages in local-market establishments). Controlling for worker and establishment characteristics, output-market wage premia are increasing in market remoteness and employee education. Establishment human capital is also increasing in output-market remoteness. The paper builds a theoretical model that provides a potential explanation for these empirical results, which is also consistent with the recent evidence on the positive relationship between output-market remoteness and quality of exports.

International Trade, Technology, and the Skill Premium

“…2 See e.g. Bernard et al (2007a) for evidence for the U.S., Verhoogen (2008) for Mexico, Alcala and Hernandez (2010) for Spain, Bustos (2011) for Argentina, Molina and Muendler (2013) for Brazil, and Eslava et al (2015) for Colombia.…”

Labour demand and the distribution of wages in South African manufacturing exporters

“…Apart from the type of country, the destination's location also plays a role in wages. For example, Alcalá and Hernández (2010) use Spanish data and while controlling for worker and firm characteristics, find that wage premia increases the further the destination country is located ('remoteness' increases). Serti et al (2010) find similar results for Italian firms in their analysis of firms trading with 'distant' markets.…”

The Exporter Wage Premium Reconsidered—Destinations, Distances and Linked Employer–Employee Data

“…More specifically, this study is connected to the far smaller number of papers that use linked employer–employee data to investigate the exporter wage premium. These include Munch and Skaksen () for Denmark, Alcalá and Hernández () for Spain and Schank et al. (), Klein et al.…”

“…So far, only relatively few empirical studies have investigated whether the exporter wage premium varies by export destination. Here, Ruane and Sutherland () find that destination matters and that the performance characteristics of Irish firms that export to markets beyond the UK differ from those that export “locally.” Alcalá and Hernández ()—to the author's best knowledge the only existing study that employs linked employer–employee data to distinguish between exporter wage premiums for different export destinations—use Spanish data to confirm that different destinations are associated with distinctive wage premiums. Additionally, Brambilla et al.…”

“…They note that in the context of the Melitz model “productivity … scales up plant size”. Besides, results by Ruane and Sutherland () and Alcalá and Hernández () could be interpreted as pointing to a positive relationship between distance and the exporter wage premium even though distance measures are not explicitly included in their regressions.…”