Reassessing the Foreign Ownership Wage Premium in Germany

Thispaperevaluatesthee?ectofforeigntakeoveronwagesofworkersinGerman establishments, using rich linked employer-employee data from 2003 to 2014. To identify a causal e?ect of foreign takeover, we combine propensityscore matching with a di?erence-in-di?erence estimator. We ?nd that a takeoverbyaforeigninvestorleadstoawagepremiumof4.0logpointsinthe year after ownership change, which further increases to 6.3 log points three years after acquisition. The wage premium is largest for high-skilled workers and higher for managers than for non-managers. We also show that the wage premium does not pick up an exporter e?ect due to a platform investment of the foreign owner, that it takes four to ?ve years before it fully develops, and that the wage increase is speci?c to foreign acquisition instead of ownership change per se.