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Multinational companies and wage inequality in the host country: The case of Ireland

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  • Paolo Figini
  • Holger Görg

Abstract

In this paper, we analyse the effects of multinational companies on wage inequality in the host country, studying the case of the Irish economy. Based on a model developed by Aghion and Howitt (1998), in which the introduction of new technologies leads to increasing demand for skilled labour and, therefore, to rising inequality, we conduct an econometric study using data for the Irish manufacturing sector between 1979 and 1995. We examine inequality between wages for skilled and unskilled labour within the same manufacturing sector. Our results indicate that there is an inverted-U relationship between wage inequality and the presence of multinationals, i.e., with increasing presence of multinationals, wage inequality first increases, reaches a maximum and decreases eventually, ceteris paribus.

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Bibliographic Info

Article provided by Springer in its journal Weltwirtschaftliches Archiv.

Volume (Year): 135 (1999)
Issue (Month): 4 (December)
Pages: 594-612

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Handle: RePEc:spr:weltar:v:135:y:1999:i:4:p:594-612

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Keywords: D63; F23; J31;

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References

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  1. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
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  12. Paolo Figini & Holger Görg, 1998. "Multinational Companies and Wage Inequality in the Host Country: The Case of Ireland," Economics Technical Papers 9816, Trinity College Dublin, Department of Economics.
  13. Haskel, Jonathan & Slaughter, Matthew, 1999. "Trade, Technology and UK Wage Inequality," CEPR Discussion Papers 2091, C.E.P.R. Discussion Papers.
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