Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade

Alfonso Irarrazabal; Andreas Moxnes; Karen Helene Ulltveit-Moe

doi:10.1162/rest_a_00285

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Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade

Alfonso Irarrazabal¹; Andreas Moxnes^2,3; Karen Helene Ulltveit-Moe

¹ Norges Bank · ² Dartmouth College · ³ BI Norwegian Business School

The Review of Economics and Statistics 2013

We investigate to what extent worker heterogeneity explains the well-known wage and productivity exporter premiums, employing a matched employer-employee data set for Norwegian manufacturing. The wage premium falls by roughly 50% after controlling for observed and unobserved worker characteristics, while the total factor productivity premium falls by 25% to 40%, suggesting that sorting explains up to half of these premiums. Recent trade models emphasize the role of within-industry reallocation of labor in response to various shocks to the economy. Our findings suggest that aggregate productivity gains due to reallocation may be overstated if not controlling for sorting between firms and workers.

DOI: 10.1162/rest_a_00285
Volume: 95 (3)
Pages: 839-849
Language: en
Export: BibTeX
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