Exposure to Global Markets, Internal Labour Markets, and Worker Compensation: Evidence from Canadian Microdata

Heather Zhang, Michael R. Smith

Abstract


Because of the fact that globalization seems, in aggregate, to be associated with rising inequality, much of the sociological literature treats the process very critically. Our results suggest a more nuanced approach. Prolonged exposure to export markets is associated with higher pay and both prolonged exposure to export markets and foreign ownership are associated with higher total compensation. Pay is substantially tied to productivity, probably through exposure to international best practices. At the same time, the presence of internal labour market traits is also associated with higher pay and higher total compensation. We conclude that it makes little sense to oppose productivity and power explanations of labour market outcomes; rather, they should be regarded as joint influences on compensation determination, consistent with the broad lesson of a "post" new structuralist sociology of labour markets.

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