interaction  of  Brazil’s  real  exchange  rate  (RER)<sup>18</sup> and  the  firm’s  export  status.<sup>19</sup> The  time-­‐varying,  firm-­‐level  controls, _! "#_ ,  include  variables  available  in  standard  firm-­‐level data  sets  such  as  log  employment,  and  the  occupational  skill  composition<sup>20</sup> of  the  firm  in addition  to  average  worker  tenure  at  the  firm,  and  controls  for  the  age<sup>21</sup> ,  gender,  and educational  skill  composition<sup>22</sup> of  the  firm.<sup>23</sup> Each  specification  also  includes  firm  fixed effects, ! _!_ ,  accounting  for  time-­‐invariant,  firm  characteristics  and  interactive  region-­‐year fixed  effects, ! _!"_ ,  capturing  the  average  effect  of  policy  changes  that  may  differentially impact  wages  of  firms  in  different  regions  of  Brazil.<sup>24</sup> Here, ! is  an  error  term  that  is _!"_ assumed  to  exhibit  no  serial  correlation,  and  to  be  orthogonal  to  all  regressors.  In  each specification,  the  standard  errors  are  clustered  at  the  industry-­‐year  level  to  account  for  the possibility  of  within-­‐industry,  across-­‐firm  correlation  in  errors  following  Moulton  (1990).

In  interpreting  our  estimates  from  specification  (1)  we  focus  specifically  on  the  magnitude of  the  differential  change  in  average  firm-­‐level  wages  at  exporters  relative  to  non-­‐exporters (!! )  as  well  as  the  overall  wage  impact  of  a  decline  in  protection  for  exporters  (!! +!" )  and non-­‐exporters  (!! ),  separately.  The  responsiveness  of  average  wages  in  firms  serving  only 18  The  real  exchange  rate  series  for  Brazil  is  constructed  in  Muendler  (2003)  and  is  available  at _<u>http://www.econ.ucsd.edu/muendler/html/brazil.html#brazdata.</u>_ 19  Since  the  overall  impact  of  the  time-­‐varying,  economy-­‐wide  RER  is  absorbed  by  the  region-­‐specific year  effects  ( _relative_ to  domestic  firms.  We  also  conduct  robustness  checks  using  industry-­‐specific  exchange  rates.  δ _tr_ ),  we  can  only  separately  identify  the  effect  of  the  RER  changes  on  exporting  firms 20  We  define  the  firm’s  occupational  skill  composition  as  the  share  of  the  firm’s  workforce  in  four occupational  categories:  unskilled  blue  collar,  skilled  blue  collar,  other  white  collar,  and  professional and  managerial  workers.  Unskilled  blue-­‐collar  workers  are  the  omitted  category.

21  We  define  the  firm’s  age  composition  as  the  share  of  the  firm’s  workforce  in  six  age  categories: youth  (15-­‐17),  adolescent  (18-­‐24),  nascent  career  (25-­‐29),  early  career  (30-­‐39),  peak  career  (40-­‐49), and  late  career  (50-­‐64).  Youth  workers  are  the  omitted  category.

22  We  define  the  firm’s  educational  skill  composition  as  the  share  of  the  firm  in  three  education categories:  less  than  high  school,  at  least  high  school,  and  more  than  high  school.  Less  than  high school  is  the  omitted  category.

23  By  including  both  the  educational  and  the  occupational  skill  composition  of  the  firm,  we  are  able  to allow  for  the  possibility  that  firms  use  increasingly  higher-­‐skilled  individuals  (as  defined  by education)  in  lower-­‐skilled  occupations.  See  Muendler  (2008)  for  evidence  on  the  skill  upgrading  of occupations  in  response  to  trade  reform  in  Brazil.

24  We  consider  Brazil’s  five  main  geographic  regions:  the  North,  Northeast,  Center-­‐West,  Southeast, and  South.

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