Please use this identifier to cite or link to this item: http://hdl.handle.net/10201/4102

Title: Firms’ Main Market, Human Capital, and Wages
Issue Date: Apr-2009
Date of creation: Apr-2009
Publisher: Departamento de Fundamentos del Analisis Economico
Related subjects: CDU::3 - Ciencias sociales::33 - Economía
Keywords: Wage inequality
International trade
Alchian Allen effect
Vertical differentiation
Abstract: This paper contributes to the recent literature on the exporter wage premium. The literature 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 (wages in local-market establishments are the reference). 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. On the theoretical side, the paper builds a model predicting that firms selling to more-remote markets employ higher human capital and pay higher wages to employees within each education group. The channel linking these variables is firms’ endogenous choice of quality. The model provides a potential explanation for the empirical results in the paper, which is consistent with the evidence on the positive relationship between output-market remoteness and quality of exports put forward by recent trade literature.
Primary author: Alcalá, Francisco
Hernández, Pedro Jesús
Faculty / Departments / Services: Departamentos y Servicios::Departamentos de la UMU::Fundamentos del Análisis Económico
URI: http://hdl.handle.net/10201/4102
Document type: info:eu-repo/semantics/article
Number of pages / Extensions: 29
Rights: info:eu-repo/semantics/openAccess
Appears in Collections:Informes o documentos de trabajo

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