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Evaluating the Foreign Ownership Wage Premium Using a Difference-in-Differences Matching Approach

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Girma, Sourafel
Görg, Holger

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Abstract

This paper seeks to identify the causal effect of foreign acquisitions on wages of skilled and unskilled workers, using difference-in-differences propensity score matching estimators. Our results suggest that there is substantial heterogeneity in the post-acquisition wage effect depending on the nationality of the foreign acquirer and the skill group of workers. We find sizable post acquisition wage effects on skilled and unskilled wages following an acquisition by a US firm. No such impacts result from acquisitions by EU multinationals. Also we discern some positive wage effects for unskilled workers resulting from acquisitions by multinationals from the rest of the world.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5788.

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Date of creation: Aug 2006
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Handle: RePEc:cpr:ceprdp:5788

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Related research
Keywords: acquisitions; difference-in-differences; matching estimator; multinationals; wages;

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  6. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20035, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
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  7. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November. [Downloadable!] (restricted)
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  8. Martins, Pedro S., 2004. "Do Foreign Firms Really Pay Higher Wages? Evidence from Different Estimators," IZA Discussion Papers 1388, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May. [Downloadable!] (restricted)
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  11. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January. [Downloadable!]
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  13. John W. Budd & Josef Konings & Matthew J. Slaughter, 2002. "International Rent Sharing in Multinational Firms," NBER Working Papers 8809, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Lipsey, Robert E. & Sjoholm, Fredrik, 2004. "Foreign direct investment, education and wages in Indonesian manufacturing," Journal of Development Economics, Elsevier, vol. 73(1), pages 415-422, February. [Downloadable!] (restricted)
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  18. Mark E. Doms & J . Bradford Jensen, 1998. "Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 235-258 National Bureau of Economic Research, Inc. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Paolo Figini & Holger Görg, 2006. "Does Foreign Direct Investment Affect Wage Inequality? An Empirical Investigation," IZA Discussion Papers 2336, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Bandick, Roger & Görg, Holger, 2009. "Foreign acquisition, plant survival, and employment growth," Working Papers 2009:9, Örebro University, Swedish Business School. [Downloadable!]
    Other versions:
  3. Heyman, Fredrik & Gustavsson Tingvall, Patrik & Sjöholm, Fredrik, 2006. "Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data," Working Paper Series 674, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  4. Roger Bandick & Pär Hansson, 2009. "Inward FDI and demand for skills in manufacturing firms in Sweden," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(1), pages 111-131, April. [Downloadable!] (restricted)
  5. Görg, Holger & Strobl, Eric & Walsh, Frank, 2007. "Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training," CEPR Discussion Papers 6171, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Nilsson Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2008. "Multinational Firms and Job Tasks," Working Paper Series 781, Research Institute of Industrial Economics. [Downloadable!]
  7. Csengödi, Sándor / Urban, Dieter M., 2008. "Foreign Takeovers and Wage Dispersion in Hungary," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Peter Egger & Wolfgang Eggert & Hannes Winner, 2007. "Saving Taxes Through Foreign Plant Ownership," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  9. TODO Yasuyuki, 2008. "Impacts of Aid-Funded Technical Assistance Programs: Firm-Level Evidence from the Indonesian Foundry Industry," Discussion papers 08024, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  10. Malchow-Møller, Nikolaj & Markusen, James R. & Schjerning, Bertel, 2007. "Foreign Firms, Domestic Wages," CEPR Discussion Papers 6292, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, 2009. "The takeover and selection effects of foreign-owned establishments: an analysis using linked employer–employee data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(2), pages 293-317, July. [Downloadable!] (restricted)
  12. Mark A. Wynne & Erasmus K. Kersting, 2008. "The globalization of U.S. business investment," Staff Papers, Federal Reserve Bank of Dallas, issue Feb. [Downloadable!]
  13. Girma, Sourafel & Görg, Holger, 2006. "Multinationals' Productivity Advantage: Scale or Technology," CEPR Discussion Papers 5841, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  14. Davide Castellani & Ilaria Mariotti & Lucia Piscitello, 2006. "Outward investments and skill upgrading. Evidence from the Italian case," CESPRI Working Papers 185, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Nov 2006. [Downloadable!]
  15. Andrew Burke & Holger Görg & Aoife Hanley, 2008. "The impact of foreign direct investment on new firm survival in the UK: evidence for static versus dynamic industries," Small Business Economics, Springer, vol. 31(4), pages 395-407, December. [Downloadable!] (restricted)
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