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

See all articles by Francisco Alcalá

Francisco Alcalá

Universidad de Murcia. Facultad de Economia y Empresa

Pedro J. Hernández

University of Murcia

Date Written: September 2010,

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.

Keywords: Wage inequality, International trade, Alchian–Allen effect, Vertical differentiation

JEL Classification: F16, J24, J31

Suggested Citation

Alcalá, Francisco and Hernández, Pedro J., Firms’ Main Market, Human Capital, and Wages (September 2010,). SERIEs-Journal of the Spanish Economic Association, Volume 1, Issue 4, pp 433-458, September 2010.. Available at SSRN: https://ssrn.com/abstract=960871 or http://dx.doi.org/10.2139/ssrn.960871

Francisco Alcalá (Contact Author)

Universidad de Murcia. Facultad de Economia y Empresa ( email )

Campus de Espinardo
Espinardo, Murcia 30100
Spain
34-868883767 (Phone)
34-868883758 (Fax)

Pedro J. Hernández

University of Murcia ( email )

Departamento Fundamentos del Análisis Económico
30100 Murcia, Murcia 30100
Spain

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