The Exporter Wage Premium Hypothesis: An Unconditional Quantile Regression and Decomposition Approach

Abstract

Relying on the World Bank Enterprise Survey dataset in 2012/13, this paper applies the unconditional quantile regression and decomposi tion estimation techniques to examine the hypothesis that workers in exporting firms receive higher wages than those in non-exporting firms. The results show that the relationship between export and firm’s wage bill is indirect and is transmitted through technology and firm size. Remarkably, these indirect relationships are much more pronounced at the more upper quantiles of the wage bill distribution. However, the net relationships of the interaction between export and technology are relatively larger and positive as compared to that of the interaction between export and firm size which are marginal and mixed. The decomposition analysis indicates that much of the pre sent exporter wage premiums are largely due to the differences in the returns to the characteristics between exporting and non exporting firms. The findings from this paper suggest directions for future work that can be directly useful for policy.