Exports and within-plant wage distributions: Evidence from mexico

In many developing countries, increas-ing international integration has been accom-panied by rising wage inequality, and traditional Heckscher-Ohlin models, which rely on between-sector reallocations to link trade and labor-market outcomes, are difficult to reconcile with this pattern (Goldberg and Pavcnik 2007). Recently, researchers have proposed a number of potential within-sector explanations based on the behavior of heterogeneous firms, involving technology choice, quality upgrading, search and bargaining, or fair wages, among other mechanisms.1 There is evidence at the plant level to support a within-sector link between trade and inequality. For instance, Verhoogen (2008) finds that initially larger, higher-pro-ductivity Mexican plants had higher export pro-pensity and wages in cross-section in 1993 an