Exporting and the wage premium: The case of South African manufacturing firms

There is much literature to support the view that export-ers (both developed and developing countries) pay higherwages than nonexporters. While this so-called export wagepremium has also been found to be prevalent in SouthAfrica, it has not been thoroughly researched, with studiesto date having relied on cross-sectional sample data ratherthan on the population of firms and workers. Using a newlyconstructed employer–employee matched panel data set onSouth African manufacturing firms, the study examined thefactors contributing to the export wage premium in thesefirms— from firm, individual, and job characteristics (bothobservable and unobservable) to firms’ distribution ofwages and export destinations (e.g., SACU-only [Firms ex-porting only to Southern African Customs Union countries],Africa-only [Firms exporting only to African countries], orinternational [Firms exporting to both African and non-African countries]). One of the key findings was that the ex-port wage premium is not about being labeled an exporter.It is, however, because of the “type of firm” (unobservablefirm characteristics) exporters are, the “type of workers”(unobservable individual characteristics) they employ, andthe “type of jobs” (unobservable job characteristics) theycreate. Policymakers should therefore be aware that simplyexpanding the pool of exporters will not necessarily givemomentum to the export wage premium phenomenon.Rather, policy measures should be aimed at increasing firm-level productivity.

KEYWORDS
employer–employee data, South African manufacturing exporters, wage premium