We use linked employer-employee data from Italy to explore the relationship between exporting and wages. To lessen the problem of better firms self-selecting into the export market, we exploit the 1992 devaluation of the Italian Lira, which represented a large and unforeseen shock to the incentive of Italian firms to export, differentiated by foreign market of destination of exports. The matched employer-employee nature of our data allows us to ascertain whether exporting firms pay higher wages because they employ high ability workers, or because they pay wage premia above and beyond what their workers would earn in the outside labor marker. We also explore whether the "export effect" is differentiated across workers. We discuss the implications of our finding for the relationship between firms' international activities and wage inequality. |
