Do exporters really pay higher wages? First evidence from German linked employer-employee data
(2006)
Many plant-level studies find that average wages in exporting firms are higher than in non-exporting firms from the same industry and region. This paper uses a large set of linked employer-employee data from Germany to analyze this exporter wage premium. We show that the wage differential becomes smaller but does not completely vanish when observable and unobservable characteristics of the employees and of the work place are controlled for. For example, blue-collar (white-collar) employees working in a plant with an export-sales ratio of 60 percent earn about 1.8 (0.9) percent more than similar employees in otherwise identical non-exporting plants.
An empirical analysis of various waves of the ALLBUS social survey shows that union density fell substantially in western Germany from 1980 to 2004 and in eastern Germany from 1992 to 2004. Such a negative trend can be observed for men and women and for different groups of the workforce. Regression estimates indicate that the probability of union membership is related to a number of personal and occupational variables such as age, public sector employment and being a blue collar worker (significant in western Germany only). A decomposition analysis shows that differences in union density over time and between eastern and western Germany to a large degree cannot be explained by differences in the characteristics of employees. Contrary to wide-spread perceptions, changes in the composition of the workforce seem to have played a minor role in the fall in union density in western and eastern Germany.
While it is a stylized fact that exporting firms pay higher wages than nonexporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.