英文出口和勞動(dòng)力市場(chǎng)成果

PublicDisclosureAuthorizedPublicDisclosureAuthorized

PolicyResearchWorkingPaper10868

ExportandLaborMarketOutcomes

ASupplyChainPerspective—EvidencefromVietNam

DeekshaKokas

GladysLopez-Acevedo

HaVu

WORLDBANKGROUP

PovertyandEquityGlobalPracticeAugust2024

PolicyResearchWorkingPaper10868

Abstract

Arechangesinthelabormarketinresponsetochangesinexportscontainedspecificallywithinexportingindustries,ordotheydispersethroughouttheeconomythroughsupplychainlinkages?ThispaperstudiesthecaseofVietNam,anexampleofasuccessfulexport-ledgrowtheconomy,toexaminethisquestion.CombiningUNCOMTRADEdata,input-outputtablesfromtheGlobalTradeAnalysisProject,and2010to2019annuallaborforcesurveydataforVietNam,thestudyconstructedameasureofeachworker’stotalexposuretoexportshocks.Themeasureaccountsforchangesduetobothdirectexportexposure(increasein

exportsintheworker’sownindustry)andindirectexposure(fromincreasedexportsinotherindustriesthatuseinputsfromtheworker’sindustry).Estimatesoftherepercussionsfromincreasingexportsonlabormarketoutcomesshowthatbothdirectandindirectexposuresignificantlyincreaseworkers’wagesandemployment,whilereducinginactiv-ityandinequality.Wagepremiumsforattendingcollegedecrease,andthegenderwagegapnarrows.Wagesincreasemoreforthelowest-incomeworkersandemploymentgainsaccruemoretounskilledworkers,whileemploymentdecreasesformoreskilledworkers.

ThispaperisaproductofthePovertyandEquityGlobalPractice.ItispartofalargereffortbytheWorldBanktoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebat

/prwp.Theauthorsmaybe

contactedatgacevedo@.

ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.

ProducedbytheResearchSupportTeam

ExportandLaborMarketOutcomes:

ASupplyChainPerspective-EvidencefromVietNam

DeekshaKokasaGladysLopez-AcevedobHaVuc

aNanyangTechnologicalUniversity

bPovertyandEquityGlobalPractice,WorldBank*

cEconomicFrontiers,InternationalInstituteforAppliedSystemAnalysis

*STATMEMENTSANDDECLARATIONS:ThispaperisaproductofthePovertyandEquityPracticeattheWorldBankGroup.ItwasfundedbytheUFTTradeFacilitationProgramandtheAustraliaWorldBankGroupStrategicPartnershipinVietNamPhase2(ABP2).WethankthefollowingcolleaguesfortheirsupportduringthisprocessRaymondRobertson,MatthewWai-Poi,RinkuMurgai,JudyYang,DorsatiMadani,SachaDrayandDeborahElisabethWinkler.TheviewsexpressedhereinarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheWorldBank.

1

1Introduction

Inthepasttwodecades,thenotableuptickintheintegrationofdevelopingnationsintoglobaltradeandvaluechains(GVCs)hassparkedheightenedinterestamongpolicymakersandresearchersregardingtheimplicationsforlabormarkets.Consequently,asubstantialbodyofliteraturehasemergedseekingtounraveltheintricaterelationshipbetweentradedynamicsandlocalizedlabormarketoutcomes.

Standardtheoryaboutthebenefitsoftradeassumesperfectmobilityoffactorsacrossgeo-graphicalregionsandindustrieswithinacountry.However,recentempiricalevidencehasshedlightonthelimitationsoftheseconventionaltheoreticalmodels.

Topalova(2010)[9]usesdata

fromIndiatoindicatethatregionsmoreexposedtotradeliberalizationhaveexperiencedslowerpovertyreductionandmutedconsumptiongrowth,divergingfromthepredictionsoftraditionaltradeframeworks.Assumingsegmentedlabormarkets,andexploitingcross-marketvariationin

importexposure,akeystudybyAutor,Dorn,andHanson(2013)[2]confirmsthatthe”China

Shock”ledtosignificantdeclineinemploymentandwagesinmoreexposedU.S.regions.Thissparkedmorestudiesontherepercussionsoftariffchangesorimportcompetitiononlocallabor

markets(PierreandSchott2016[7];Acemogluetal

.

2016[1];Dix-CarneiroandKovak2013[3])

. Itiscrucialtonotethattradeaffectsnotonlytradablebutalsonon-tradablesectorswithinthesamelocallabormarkets;whileincreasedimportcompetitionormarketaccessdirectlyim-pactsspecifictradablesectors,therearealsoindirecteffectsonnon-tradablesectorssuchasretail,healthcare,orhospitalityinthesameregion.Withfewexceptions,currentliteraturelargelyignoresestimatingtheseindirecteffectspropagatedthroughdomesticproductionlinkageswithinacountry

[10]

.Whileafewstudieshaveexaminedtheindirecteffectsofimportshocksonlocallabormar-kets,therehasbeenlimitedexplorationofindirecteffectsofexports.Acentralmotivationforthisempiricalinquirystemsfromthewell-documentedfactthataseconomiesundergostructuraltrans-formation—thatis,astheymovefromlessagriculturetomoreservicesandmanufacturing—the

2

proportionofdomesticservicesorinputsintotaloutputstendstorise(McCaig2013[6];Ghosh

2021).Atfirstglance,thismightsuggestthatalargerproportionofemploymentremainsunaf-fectedbytrade,giventhelargernon-tradablecomponentoftheservicessector.However,moretradecanevenindirectlyinfluencenon-tradableindustriesthatserveasinputstotradeablesectors.

ThispaperfocusesonestimatingthetotaleffectonlabormarketoutcomesinresponsetoanexportshockattheprovinciallevelinVietNamfrom2009to2019.Inordertofullycapturetheoverallimpactoftrade,weneedtoconsidercrucialsupplychainlinkagespreviousresearchhasoverlooked.Ouranalysisgoesbeyondsolelyfocusingondirectlyexportingindustriesandaccountsforindustriesindirectlyaffectedbytherisingdemandforexports.

Toaccomplishthis,weadoptamulti-stageapproach.Initially,weemployaninstrumentalvariable(IV)methodologytoisolateanexogenouscomponentoftradedrivensolelybyforeigndemand.ThechosenIVistheproportionofagiventradingpartnercountry’sshareinaspecificcommodityrelativetoVietNam’stotalexportvalueinthatcommodity,adjustedbytheobservedGDPgrowthofthepartnercountry.ThisIVdemonstratesastrongpredictivecapacityforVietNam’sexportvalueswhilemaintainingplausibleindependencefromanysupply-sidedeterminantsofexports.

Subsequently,leveragingthepredictedexportexposureobtainedinthefirststage,weconstructamatrixdelineatingthedirectandindirectexposureofeachindustryineachprovince.Thisisaccomplishedbyutilizinginput-outputtablesthatdocumenttheflowofintermediategoodsamongdifferentsectorsintheeconomy.Thepredictedexportexposurecalculatedearlieristhendis-tributedproportionallytothelaborshareofeachindustrywithineachprovince.

Finally,weestimatethedirectandindirecteffectsofexportsbyconductingaregressionanaly-sisofthesecomputedexposuresagainstvariouslabormarketoutcomesofinterestattheprovinciallevel:wagelevels,incomedisparities,thepremiumoncollegeeducationwages,genderwagedifferentials,employmentrates,ratesofinactivity,informalityinemployment,andfemaleem-ploymentrates.Additionally,weconductadetailedexaminationofhowtheselaboreffectsdiffer

3

acrossgender,incomelevels,educationalattainment,andemploymentsectorstoelucidatewhichdemographicgroupsbenefitandwhichareadverselyaffectedbythisprocess.Ouranalysisgoesbeyondsolelyfocusingondirectlyexportingindustriesandaccountsforindustriesindirectlyaf-fectedbytherisingdemandforexports.

ThisstudylooksatthespecificcontextofVietNamforafewimportantreasons.First,VietNamexemplifiesthesuccessofAsia’sexport-drivengrowthmodel,makingitaprimecandidateforstudyduetothewealthofempiricalevidenceavailable.Overthepasttwodecades,VietNamhaswitnessedsubstantialincreasesinrealincome,areductioninpoverty(excludingtheCovid-19pandemicin2020),andanalignmentofimport-exportactivitieswithGDP,reflectingitsintegra-tionintoglobalvaluechains.Improvementsinthelabormarkethaveaccompaniedthiseconomicprogress,includinglowerunemploymentratesandincreasedfemaleworkforceparticipation.Fig-ure

1

encapsulatesVietNam’sPovertyRateReductiondrivenbyitsexportfocus.Figure

3

intheAppendixprovidesmoretrendsinTrade,Labor,andotherSocioeconomicIndicatorsofVietNamforaside-by-sidevisualcomparison.

4

Figure1:TrendinPovertyRateinVietNam

Source:WorldBankstaffcalculations

Figure2:DomesticServiceSectorShareinTotalOutputofDomesticNon-ServiceSectorinVietNam(2020)

Source:WorldBankstaffcalculationwithAsianDevelopmentBankdata.

5

Second,theprominenceofdomesticserviceswithinVietNam’snon-tradablesectorsisnotable,representinganaverageof10percentoftotaloutput.Theconnectionbetweennon-serviceandser-vicesectorsisvitalforamplifyingtheimpactofexportsonlabormarkets.InVietNam,domesticnon-serviceindustriesheavilyrelyondomesticservicesasinputs.Figure

2

illustratesthataround50percentofVietnamesenon-servicesectorsuselocalservices,makingupmorethan15percentoftheirendoutput.Neglectingtheseindirectexporteffectsondomesticservicesandinputsupplysectorsoverlooksacruciallinktyinglocallabormarketstoforeigndemandchanges.Recognizingandunderstandingtheseconnectionsiscrucialforgraspingthewidereffectsofexport-orientedeconomicactivitiesinVietNam.Asignificantproportionofnon-servicesector-countryclustersexhibitasubstantialrelianceonlocalservices,withapproximately50percentshowcasingalocalservicesusageshareexceeding8percent,andaminoritydisplayingsharesashighas20percent.Againstthisbackground,thisstudyaimstoexaminethedirectandindirecteffectsofexports,whicharesupportedbysupplychainconnections,onthelabormarket.

Third,VietNamheavilyreliesontheadvantageousdemographicstructureofitslaborforcetopropeleconomicadvancement,characterizedbyagreatproportionofthepopula-tionbeingofworkingageaswellasasignificantspatialvariationacrosssectoralspecialization.Therefore,thisinvestigationaimstoleveragethesevariancestoscrutinizehowthepotentialeffectsvaryacrossdiversedemographicstratawithinthelaborforce:urban,rural,youthful,highly-skilled,andfemalecohorts,amongothers.

Wefindthatbothdirectandindirectexposuretoexportshasasignificantimpactonlabormar-ketoutcomes,especiallyforthosewithnotolittleeducationandinthelowestincomebracket.Thewagepremiumforattendingcollegedecreases,andthegenderwagegapnarrows.Withrespecttoemploymentvariables,directexposuretoexportsincreasesemploymentandreducesinactivity,withfindingsremainingconsistentwhenaccountingforsupplychainlinkages.Thegainsinem-ploymentconcentrateamongworkerswithnoschooling,whiletheemploymentratefallsformoreskilledworkers.

6

Inthispaper,weestimatethetotalimpactofchangesinexportsdrivenbyforeigndemandshocks,ratherthantariffchangesorimportcompetition,onlabormarketoutcomesincludingin-comeandemploymentvariables.Thisdirectandindirectexport-induceddemandhasbeenstudiedinGoutametal.

(2017)[5];however,asonlyemploymentvariablesareinfocus,manyother

questionsregardingwagesandheterogeneityhavebeenleftunanswered.

Thepaperproceedsasfollows.Section

2

presentsaconceptualframeworkthatallowsustoexaminethelocallabormarketrepercussionsofexports,incorporatingasupplychainperspective.Section

3

discussesthedatausedandhowweconstructedtheexportexposureanalysisusingInput-Outputlinkages.Section

4

describestheempiricalstrategyandSection

5

presentstheempiricalresults.Section

6

concludes.

2ConceptualFramework

Weapplyastandardshift-shareapproachthatassessestheeffectsoftradeshocksonlabormarkets.RelevantworksintheliteratureincludeAutor,DornandHanson(2013)andDix-Carneiroand

Kovak(2015)[3][2]

.MoredirectlyrelatedtoexploringtheeffectsofexportsonlocallabormarketsarestudiesbyRobertsonet.al.(2021)andG

es,Lopez-Acevedo,andRobertson(2023)[8][4]

.

Unlikethepapersabove,however,ourindexinthispaperisnotoneofexportexposure,butoneoftotalexportreceiptsexposure.Byexploitingtheinput-outputstructureofproduction,weaccountforbothdirectandindirectpaymentstofactorsofproduction,andusetradedatatomoveclosertoregionalproduction,whichiswhatwewouldideallyliketoobserve.

Lets,dbeindustryindex(sstandsforsourcesectoranddstandsfordestinationsector),andletγs,ddenotetheintermediateusesharesofagoodofindustrysintheproductionprocessofagoodofindustryd.Undertheassumptionsofperfectcompetitiveormonopolisticcompetitiveproductmarkets,aconstantfractionoftotalsaleswillbepaidtothefactorsofproduction.Ifdomesticfactormarketsarecompetitive,therearenomark-upsormark-downsonfactorprices.

7

Underthoseassumptions,then,uptoafirst-orderapproximation,thevalueofexportsalescanbedistributedthroughtheproductionnetworkinthefollowingfashion:

Valueoftdofsectord∝γs,d+Valueadfsectord

Valueofintermediateuseofsectord

Therefore,wecanaccountfortotalpaymentstoeachsourcesectorsbysummingoverpaymentstosectorsfromeverysectordinadditiontothevalueaddedofsectors:

orinwords,

TotalExportExposure∝IndirectExportExposure+DirectExportExposure

Sofar,wehavedefinedtheserelationshipsintermsofinput-outputlinkages.Toturntotheempir-icaleffectsonlabormarkets,wenowdefinelocallabormarketsexposuretototalexportreceipts.Letrdenotedifferentregionsinthecountry,exposuretototalexportreceiptsgrowthatregionallevelisdefinedas:

whereXr,s,tdenotestotalexportexposureofindustrystoregionratperiodt,asdefinedabove;

Lr,s,tdenotestotalemploymentofindustrysinregionrattimet.Theterm

ofregionrinthenationalemploymentofindustrys.

8

3Data

ThegoalofthepaperistoassessthedirectandindirecteffectsofexportexpansiononlocallabormarketoutcomesinVietNamwhileaccountingforsupplychainlinkages.Todothis,weexploitvariationinexportexpansionacrossprovincesandindustriesbetween2010and2019andcombineexportdatafromtheUnitedNationsCommodityTradeStatistics(UNCOMTRADE)data,input-outputcoefficientmatrixfromGlobalTradeAnalysisProject(GTAP)data,andinformationonlocallabormarketoutcomesfromVietNam’sLaborForceSurvey(LFS)data.Detailsoneachdatasetandcleaningtechniquesaredescribedbelow.

3.1LaborForceData

OurmainsourceoflabormarketdataistheLFSprovidedbyGeneralStatisticsofficeofVietNam(GSO)between2010and2019,aperiodduringwhichitwasimplementedeveryyear.TheLFSobservationscollectinformationinahostofareasincludingkeylabormarket,household,andindividualdemographiccharacteristics.

Ouranalysislooksattwomainsetsofoutcomevariables:wageoutcomesandemployment

outcomes.Thewageoutcomedatasetsincluderealannualwages,realannualincome,collegedegreewagepremiumandgenderwagepremium.Theemploymentoutcomesetsincludeem-ploymentrate,inactiverate,informalitystatus,andfemalelaborforceparticipation.Alloftheoutcomesareconstructedfromsurveyquestionnaires,ofwhichthewageoutcomesarecalculatedattheprovincexsectorlevel,whiletheemploymentoutcomesareaggregatedattheprovincelevelbecausewedonothavesectorinformationforthosewhoarenotemployed.Overtheperiod2010to2019,severalchangeswereintroducedintheVietNameseLFS,togetherwithupdatesinconceptsanddefinitions.Thesehavebeenstandardizedtomakekeylabormarketoutcomes,administrativegeographies,aswellasindustryclassifications,comparableovertime.

9

3.2ConstructionofExportExposureUsingInput-OutputLinkages

Anychangesintheforeignexportdemandforproductsofaparticularsectorwillhavedualeffects.First,itwillleadtoadirectincreaseindemandforoutputinthatsector.Secondly,itindirectlyaffectstheupstreamsectorsthatsupplyinputstothedirectlyimpactedsector.Notaccountingfortheselinkageswillunderestimatetheexportexposureattheprovincelevel,assomeprovincesmaynothaveaconcentrationofindustriesdirectlyexportingbutstillbesupplyingtoexportingsectors.Toaccountforthesevaluechainlinkages,theliteraturerepresentsusesLeontiefinverseofaninput-outputproductionmatrixforaneconomy.Themethodclearlytrackstheuseofintermediateinputsbyeachsector(Goutametal.2017;Acemogluetal.2016;Acemogluetal.2012).

Toexplorepotentialeffectsofexportsthroughdomesticinputs,weemploythe2011VietNamInput-Outputtabletocalculatetheinputsharesofeachindustry.Thesesharesaredeterminedbydividingtheinputusagebythegrossoutput(whichincludesthevalueaddedintheownsectorwithown-sectorinputs).Wethenmultiplytheresultingsharesbytheexportsofthefinalsectoraggre-gatedovertheinputindustrytoobtainthetotalvalueofexportsforeachinputsector(representingthecumulativeeffectofservicingmultipleexportingsectors).Inthissense,non-tradedsectorsthatareassignedavalue“zero”forexportswillalsohaveanimpliedvalueandwillbeusedtoestimatethetotalexportexposureindexattheprovincelevelusingthefollowingindex.

Thetotalexportexposure(accountingforsupplychainlinkages)ismeasuredasthegrowthinexportsinindustryibetweentimeperiods,tandt+1,capturedbythetermΔWi,t+h=Wi,t?Wi,t+h.ThischangeisallocatedtoeachprovincerinVietNamusingtheshareofprovincesintotalnationalemploymentineachindustryi.

ToconstructthetotalexposureindexattheprovincelevelinVietNam,weutilizeseveraldatabases.Initially,wegatherdataonexportvaluefromtheUNCOMTRADEdatabase.Toaccountforde-

10

mandgeneratedinothersectorsasaresultofexports,andthuscalculatetheoverallexposureindex,weincorporatethe2011input-output(I-O)GTAPtables.Wechose2011I-Otableinsteadofamorerecentyearavailable(2016)becauseitreflectstheeconomyatthebeginningofthestud-iedperiod,whichguaranteesthatalltheshockscomputedareex-ante.Animportantunderlyingassumptionwiththisdecisionisthatthereisn’tanysignificantchangesinthesectoralstructure.Admittedly,thisisamajorlimitofthepaperthatwehavetoacceptduetodataconstraint

.1

Webeginbycomputingtheinput-outputcoefficientsfromtheGTAPI-Otables,whichcapturetheinterdependenciesbetweensectorsinaneconomy.WematchthesecoefficientswithtradedatatheUNCOMTRADEdatatocomputethetotalexportvalueforeachsector,accountingforindirectchangesinexportdemandthroughinput-outputlinkages.

ThenextstepistolinkthesetotalexportdatawiththeLFSs.WeutilizeconcordancetablesavailablefromUNSDthattranslateInternationalStandardclassification(ISIC)rev3.1.codesintoHScodes.Byleveragingthisconcordance,wemergethemicro-dataonlaborforcevariablesattheindustryandarealevelinVietNamwithtotalexportdata.Oncetheintegratedlaborandtradedataisprepared,weareabletocalculatethetotaltradeexposureindexbasedonprovinces,aspreviouslyexplained.Thestartingpointfortheanalysisistheideathattheimpactofatradeshockdiffersacrossregions,dependingoneachprovince-industrycomposition.

Afundamentalprincipleforthisapproachistheexistenceofsegmentedlabormarkets.Existinglabormobilitybarriersorrigidities(suchascommutingcostsorlackoftransportinfrastructure)allowustoobservevariationsinlocallabormarketoutcomesand,asaresult,toestimatetheeffectsofdifferentiatedexposuretotrade.Oneheuristicmethodforassessinglabor-marketinte-grationinvolvesexaminingthestandarddeviationofwagesacrossregionsandovertime.Thisheuristicmeasureisusedbecausevariousfactorscanpreventwageequalizationacrossregions.Toinvestigatetheleveloflabor-marketintegrationinVietNam,wecalculateprovinceandindustry-provincepremiums,theexistenceofwhichcanindicatesegmentedlabormarkets.Tables

1

and

2

1Infutureexercises,wewillattempttotestthisassumptionusingalaterI-Otable

11

intheAppendixclearlyshowthatwagesarenotequalacrossprovincesandindustry-provincesinVietNam,providingstrongsupportfortheexistenceofsegmentedlabormarketsduringourstudyperiod.

4Identification

Thegoalofourempiricalstrategyistounderstandhowrisingexportexpansionaffectsrealwages,informality,andfemalelaborforceparticipation,exploitingdataoncross-regionalexposuretototalexportsinVietNambetween2010and2019.Tothiseffect,weconsiderthefollowingsimplelinearregressionmodel:

ΔYr,t+h=β0+β1ΔXr,t+h+β2Kr,t+εr,t

whereΔYr,t+histhechangeinoutcomesofinterest,mayitbeemploymentrate,informalityrate,femaleparticipationrate,averageannualincomeaverageannualwage,collegepremiumorgenderwagegap,amongothers,identifiedatprovincerovertheperiodfromtimettot+h.ΔXr,t+hisourmainindependentvariable,whichstandsforthechangeatregionalleveloftotalexportexposure,asdefinedintheprevioussection.Thekeycoefficientofinterestisβ1,whichmeasurestheeffectsoftotaltradeexposureontheoutcomeafteraccountingfortheI-Ostructure,Kr,tisthevectorofex-antecontrolvariablesincludingindividualdemographicbackgroundtakenfromtheLFSsuchasurbandummy,gender,maritalstatus,agegroup,educationlevel,socialsecurityownership,amongothers.

Arelevantissuethatneedstobeaddressedispotentialendogeneityintheexportexposurecovariate.Sinceweobservechangesinlaboroutcomesandexportssimultaneously,wecannotidentifywhichoneisdrivingtheother.Toensuretrulyexogeneityofourexportexposure,weneedavariablethatpredictsexportsfromVietNambasedsolelyonitstradingpartnersinternal

12

demandgrowth,ratherthansupply-sidedeterminants.Hence,weconstructourinstrumentusingtime-seriesregressionsofVietNamexportstoitstradingpartnersonthetradingpartner’sGDPbyindustryatthefour-digitlevelasfollows:

where,denotescountryj’sshareofindustryi’export;?Yj,t+histhechangeinreal

GDPindestinationcountryj.

PredictedvaluesorexportsfromtheseregressionsserveasaproxyforVietNam’sexportstoitstradingpartnersexplainedexclusivelybytheexportmarket’sdomesticaggregatedemand.ThesepredictedexportscombinewithI-Ocoefficientstogeneratetotalexportsaccountingforsupplychainlinkages.Subsequently,weusethesetotalexportstogenerateprovincialexportexposureinVietNam.

Then,estimationwilltaketheformoftwo-stageleastsquares,withthefirststagebeing:

?Xr,t+h=+?Zr,t+h+Kr,t+r,t

andthesecondstage:

?Yr,t+h=β0+β1?r,t+h+β2Kr,t+εr,t

where?r,t+histhepredictedvalueobtainedfromthefirststageregression:

13

5Results

5.1ImpactofExportsonWages

Table

6

presentstheoutcomesofthetwo-stageleastsquaresregression,detailingtherelationshipbetweenchangesinincome-relatedvariables—wages,income,genderwagedifferentials,andthecollegewagepremium—andshiftsinexposuretoexports,instrumentedbyalterationsinexposuretoforeigndemand.Allmodelsincorporatestandarderrorsclusteredattheprovincelevelandcon-trolforvarioussocio-demographicfactorssuchasage,gender,educationlevel,urban-ruralstatus,economicsector,andhoursofwork.ItisimportanttonotethatalthoughWagesaremeasuredannually,wehaveincludedHoursofLabor(Weeklyaverage)intheregressiontocontrolfortheamountoftimetheworkersspendatwork.Thus,theresultscanalsoreflectaneffectthatissim-ilartotheeffectonhourlywage.AnotherdetailthatisworthnotingisthattheIncomevariableoftenreflectsamorepositiveimprovementcomparedtotheWagevariableforindividuals,asitencompassesadditionalsourcesofnon-wageincomesuchasbonuses,dividends,andpersonalgifts.

Overall,allmeasuresofexposure—TotalExposure,DirectExposure,andIndirectExposure—exhibitstatisticallysignificanteffectsonincome-relatedvariables.DirectExposuredemonstratesthemost

substantialimprovement,withaUS$32.5increaseinannualwagesandaUS$36.31increaseinan-nualincomeforeveryUS$1,000riseinannualDirectExposureperworker.WhileIndirectExpo-sureyieldsasimilareffectonwages(anincreaseofUS$31.14perunitofexposure),itsinfluenceonincomeisrelativelylower(anincreaseofUS$23.22perunitofexposure)comparedtoDirectExposure.

Additionally,variablesreflectinglabormarketinequality—namely,thecollegewagepremiumandgenderwagegap—decreaseinresponsetoexportexposure,withthecollegepremiumexhibit-ingahigherdegreeofsignificance.Specifically,aUS$1,000increaseinannualdirectexposureperworkerresultsinaboutaUS$28reductioninreturnonattendingcollege.Theeffectofindirect

14

exposureonthispremiumisareductionofaboutUS$30.87.Togiveaben