Firms’ Main Market, Human Capital, and Wages
SERIEs-Journal of the Spanish Economic Association, Volume 1, Issue 4, pp 433-458, September 2010.
Posted: 6 Feb 2007 Last revised: 20 Dec 2015
Date Written: September 2010,
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.
Keywords: Wage inequality, International trade, Alchian–Allen effect, Vertical differentiation
JEL Classification: F16, J24, J31
Suggested Citation: Suggested Citation