abstract

Export activity shapes workers’ experience-wage profiles. Using detailed Brazilian manufacturing employer-employee and customs data, we document that workers’ experience-wage profiles are steeper at exporters than at non-exporters. Aside from self-selection of more capable firms into exporting, we show that workers' experience-wage profiles are steeper when firms export to high-income destinations. We then develop and quantify a model with export market entry, wage renegotiations, and human capital accumulation to interpret the data and perform counterfactual experiments. We find that human capital growth can explain roughly 40 percent of differences in wage profiles between exporters and non-exporters as well as the gains in experience returns after entry into high-income destinations. We also show that increased human capital per worker can account for one-half of the overall gains in real income from trade openness. In slowing human capital accumulation, trade liberalization can induce welfare losses if the trade partners are low-income destinations.

keywords: Export activity; Wage profiles; Human capital accumulation

jel: E24, F12, F14, F16, J24, J64