CDEP-CGEG WORKING PAPER NO. 64

Exports and Wage Premia: Evidence from Mexican Employer-Employee Data

Judith A. Frias, David S. Kaplan, Eric Verhoogen, and David Alfaro-Serrano

Abstract:

This paper draws on employer-employee and longitudinal plant data from Mexico to investigate the impact of exports on wage premia, defined as wages above what workers would receive elsewhere in the labor market. We decompose plant-level average wages into a component reflecting skill composition and a component reflecting wage premia. Using the late-1994 peso devaluation interacted with initial plant size as a source of exogenous variation in exports, we find that exports have a significant positive effect on wage premia, and that the effect on wage premia accounts for essentially all of the medium-term effect of exporting on plant-average wages.

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