DP12092 Online Exports and the Wage Gap

Author(s): Marcio Cruz, Emmanuel Milet, Marcelo Olarreaga
Publication Date: June 2017
Keyword(s): online trade, wage gap
JEL(s): F14, J31, L86
Programme Areas: International Trade and Regional Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12092

The development of the internet is often seen as a source of demand for skilled workers and therefore a potential driver of the wage gap between skilled and unskilled workers. In this paper we focus on the impact that international trade in online platforms has on the wage gap. Because online trade allows smaller firms with relatively more unskilled workers to access world markets we can a priori expect that an expansion of online exports reduces the wage gap. After correcting for potential endogeneity bias in a sample of twenty three developing countries for which we can match online trade and wage gap data, we find that a 1 percent increase in the share of online exports over GDP leads to a 0.01 percent decline in the wage gap.