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Foreign Taleovers and Wages: Theory and Evidence from Hungary

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Author Info
Sándor Csengodi (Corvinus University of Budapest)
Rolf Jungnickel (HWWA)
Dieter Urban (Johannes Gutenberg - University Mainz)

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Abstract

This study discriminates FDI technology spillover from learning effects. Whenever learning takes time, our model predicts that foreign investors deduct the economic value of learning from wages of inexperienced workers and add it to experienced ones to prevent them from moving to local competitors. Hence, the national wage bill is unaffected by foreign takeovers. In contrast to learning, technology spillover effects occur whenever a worker with MNE experience contributes more to local firms’ than to MNEs’ productivity. In this case, experienced MNE workers are hired by local firms and the host country obtains a welfare gain. We investigate empirically wages, productivity, and worker turnover during the course of foreign takeovers on employee-employer matched data of Hungary and find evidence consistent with learning, but not with FDI technology spillovers.

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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 208.

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Date of creation: 15 Jun 2005
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Handle: RePEc:csl:devewp:208

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Related research
Keywords: FDI; foreign takeover; cross-border M&A; wage regression; employee-employer matched data; propensity score matching; FDI technology spillover;

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Find related papers by JEL classification:
F2 - International Economics - - International Factor Movements and International Business
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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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. Sándor Csengödi & Rolf Jungnickel & Dieter M. Urban, 2008. "Foreign Takeovers and Wages in Hungary," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(1), pages 55-82, April. [Downloadable!] (restricted)
  2. Modén, Karl-Markus & Norbäck, Pehr-Johan & Persson, Lars, 2007. "Efficiency and Ownership Structure – The Case of Poland," Working Paper Series 703, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
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