Trade, wages, and profits

Hartmut Egger (), Peter Egger and Udo Kreickemeier

European Economic Review, 2013, vol. 64, issue C, 332-350

Abstract: This paper formulates a structural empirical model of heterogeneous firms whose workers exhibit fair-wage preferences, leading to a link between a firm's operating profits and wages of workers employed by this firm. We estimate the parameters of the model in a dataset of five European economies. The model predicts an exporter wage premium, which we find to be sizable in all countries, with nearly 6% on average. The estimates enable us to conduct counterfactual exercises. We find that openness to international trade has quantitatively important effects, leading to higher wage inequality and lower aggregate employment.

Keywords: Structural models; Heterogeneous firms; Fair wages; Labour market imperfections; Exporter wage premium (search for similar items in EconPapers)
JEL-codes: C31 F12 F16 J31 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

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Related works:
Working Paper: Trade, Wages, and Profits (2012)
Working Paper: Trade, Wages, and Profits (2012)
Working Paper: Trade, Wages, and Profits (2011)
Working Paper: Trade, wages, and profits (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:64:y:2013:i:c:p:332-350

DOI: 10.1016/j.euroecorev.2013.09.008

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