6533b828fe1ef96bd128778e
RESEARCH PRODUCT
Foreign-owned firms around the world: A comparative analysis of wages and employment at the micro-level
Pedro S. MartinsThorsten SchankAlexander HijzenRichard Upwardsubject
Micro levelEconomics and EconometricsLabour economicsJob insecurityForeign ownershipmedia_common.quotation_subjectWageEmployment growthDeveloping countryForeign direct investmentEconomicsEmerging marketsFinancemedia_commondescription
Abstract This paper provides the first microeconomic cross-country analysis of the effects of foreign ownership on wages, employment and worker turnover rates. Using firm-level and linked worker-firm data, we apply a standardised methodology for three developed (Germany, Portugal, UK) and two emerging economies (Brazil, Indonesia). We find that wage effects are larger in developing countries, and that for each country the largest effect on wages comes from workers who move from domestic to foreign firms. Employment growth after foreign takeover is concentrated in high-skill jobs. In contrast to widespread fears, there is no evidence that wage gains come at the expense of greater job insecurity; separation rates actually fall slightly after takeover. We conclude that the positive effect of foreign ownership on wages is not primarily driven by its impact on incumbent wages, but by its impact on the creation of high-wage jobs.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2013-05-01 | European Economic Review |