Exporters and the Rise in Wage Inequality – Evidence from German Linked Employer-Employee Data

45 Pages Posted: 20 Nov 2010

See all articles by Daniel Baumgarten

Daniel Baumgarten

Ruhr Graduate School in Economics; Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Date Written: November 19, 2010

Abstract

Using a linked employer-employee data set of the German manufacturing sector, this paper analyses the role of exporting establishments in explaining rising wage dispersion. Over the period of analysis (1996-2007), the raw wage differential between exporters and domestic establishments increased substantially, which can only partly be attributed to corresponding changes in human capital endowments and the returns to them. These findings are consistent with recent heterogeneous-firm trade models that feature an exporter wage premium as well as variability of the premium with respect to increasing trade liberalization. A decomposition analysis shows that the increase in the conditional wage gap indeed contributed to rising wage inequality both within and between skill groups. In contrast, the growing employment share of exporters contributed to a reduction in wage dispersion.

Keywords: Exports, Wages, Exporter Wage Premium, Wage Inequality, Linked Employeremployee Data, Decomposition

JEL Classification: F16, J31

Suggested Citation

Baumgarten, Daniel, Exporters and the Rise in Wage Inequality – Evidence from German Linked Employer-Employee Data (November 19, 2010). Ruhr Economic Paper No. 217. Available at SSRN: https://ssrn.com/abstract=1711852 or http://dx.doi.org/10.2139/ssrn.1711852

Daniel Baumgarten (Contact Author)

Ruhr Graduate School in Economics ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
+492018149510 (Phone)
+492018149500 (Fax)

HOME PAGE: http://www.rgs.econ.org/

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
+492018149510 (Phone)
+492018149500 (Fax)

HOME PAGE: http://www.rwi-essen.de/

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