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

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 export propensity as a source of exogenous changes 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.