Wage Premium of Exporting Plants in Japan: Do plant and firm size matter?

Author Name ITO Koji (Consulting Fellow, RIETI)
Creation Date/NO. October 2017 17-E-115
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Do the benefits firms obtain through globalization go to their workers? For example, do workers in exporting firms receive higher compensation than those in non-exporting firms? To investigate this, this paper constructs cross-sectional employer-employee data by merging plant and worker data, estimates a Mincer-type wage function in Japan's manufacturing sector, and examines the existence of the part of wages that are purely correlated with exports and that cannot be explained by any other characteristics of the workers and plants.

The results of the estimation indicate that the wages of exporting plants are higher than those at non-exporting plants even after controlling for the characteristics of workers and plants, and the estimation of plant and firm size shows that the wage differential correlated with exports is remarkable for relatively smaller plants or firms. In addition, according to the 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 on a smaller scale, the export premium constitutes a certain share, i.e., around 30%.

This is the English version of the Japanese Discussion Paper (17-J-050) with some additional information and changes.