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Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers

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Author Info
Pedro S. Martins (Queen Mary, University of London)
Luiz A. Esteves () (Universidade Federal do Paraná and Università di Siena)

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Abstract

How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small.

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Publisher Info
Paper provided by Universidade Federal do Paraná, Department of Economics in its series Working Papers with number 0079.

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Length: 41 pages
Date of creation: 2008
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Handle: RePEc:fup:wpaper:0079

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Related research
Keywords: foreign direct investment; ownership changes; worker mobility;

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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This page was last updated on 2009-11-6.

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