This paper explores the links betweenexports, export destinations and skill utilization by firms.The authors identify two mechanisms behind these links,which we integrate into a unified theory of exportdestinations and skills. First, exporting to high-incomecountries requires quality upgrades that are skill-intensive(Verhoogen, 2008). Second, exporting in general, andexporting to high-income destinations in particular,requires services like distribution, transportation, andadvertising, activities that are also intensive in skilledlabor (Matsuyama, 2007). Both theories suggest a skill-biasin export destinations: firms that export to high-incomedestinations hire more skills and pay higher wages thanfirms that export to middle-income countries or that sellsdomestically. The authors test the theory using a panel ofmanufacturing Argentine firms. The data cover the period1998-2000 and thus span the Brazilian currency devaluationof 1999. The authors use the exogenous changes in exportsand export destinations brought about by this devaluation ina major export partner to identify the causal effect ofexporting and of exporting to high-income countries on skillutilization. The authors fine that Argentine firms exportingto high-income countries hired a higher proportion ofskilled workers and paid higher average wages than otherexporters (to non high-income countries) and domestic firms.Instead, the authors cannot identify any causal effect ofexporting per se on either skill utilization or average wages.
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