Wage Premium of Exporting Plants in Japan: Analysis on matched employer-employee data

Author Name ITO Koji (Consulting Fellow, RIETI)
Creation Date/NO. August 2017 17-J-050
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Do the benefits that firms obtain by globalization finally go to their workers? For example, do workers of exporting firms receive higher compensation than those of non-exporting firms? To clarify this point, this paper constructs cross sectional employer-employee data by merging plants' and workers' data, estimates the Mincer-type wage function in Japan's manufacturing sector, and examines the existence of a part purely correlated with exports, which cannot be explained by other characteristics of workers and plants.

The result of the estimation indicates the wages of exporting plants are higher than non-exporting plants even after controlling for the characteristics of workers and plants, and the estimation according to plant and firm size shows that the wage differential correlated with exports is remarkable among relatively smaller plants or firms. In addition, according to Blinder-Oaxaca decomposition, the portion of the wage differential correlated with exports constitutes less than 10% of the wage premium of exporters, but for plants with smaller scale, the export premium constitutes a certain share of around 30%.

Based on the results, it is clear that in Japan's manufacturing sector, exports and wages are clearly correlated, especially in smaller-scale plants and firms.

The English version of this paper is 17-E-115.