The World Bank Economic Review Advance Access published online on June 6, 2009
The World Bank Economic Review, doi:10.1093/wber/lhp004
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Do Exporters Pay Higher Wages? Plant-level Evidence from an Export Refund Policy in Chile
Correspondence: email address is ivan_kandilov{at}ncsu.edu.
JEL codes: O15, F16, J30, F14
The impact of increased export activity on plant wages is estimated in a developing country context. To avoid potential endogenous selection problems, the empirical analysis benefits from exogenous variation in exports induced by a policy experiment—an export subsidy system implemented in Chile in 1986. Analyses using data from a panel survey of Chilean manufacturing establishments show that while the export subsidy had only a modest positive impact on the industrywide relative high-skilled wage, it significantly increased the plant-level relative high-skilled wage in medium-size establishments, which are most likely to take advantage of the subsidy and enter the export market.
Ivan T. Kandilov is an assistant professor of agricultural and resource economics at North Carolina State University; The author thanks Charlie Brown, Jim Levinsohn, Daniel Hamermesh, John DiNardo, Joshua Linn, Peter Debaere, and Amy Kandilov for all their support, comments, and helpful conversations. The author also thanks the journal editor, three anonymous referees, and seminar participants at the University of Michigan, Indiana University, Wellesley College, George Washington University, Miami University of Ohio, and North Carolina State University for useful comments. He is also grateful to Jim Levinsohn for sharing the data.