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Do Workers Benefit from Foreign Ownership? Evidence from Swedish manufacturing

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  • Bandick, Roger

    ()
    (ESI)

Abstract

The paper examines whether foreign-owned firms pay higher wages than domestically owned firms, controlling for a number of firm characteristics. As in most other similar studies I find that this appears to be the case. In particular, skilled labor seems to profit from working in foreign-owned firms. Furthermore, I distinguish between Swedish multinational enterprises (MNEs) and other domestically owned firms. In accordance with the idea that MNEs are superior to other firms the former pays significantly higher wages than other domestically owned firms. Foreigners acquiring high-wage Swedish MNEs may thus account for the higher wages in foreign-owned firms. Alternatively, the acquired firms might have more favorable wage growth than non-targeted domestically owned firms. Nevertheless, the two explanations are not mutually exclusive I only get support for that foreign firms select high-wage firms (Swedish MNEs as well as non-MNEs) for acquisition.

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Bibliographic Info

Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 201.

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Length: 27 pages
Date of creation: 17 Dec 2004
Date of revision:
Handle: RePEc:hhs:fiefwp:0201

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Keywords: Wage differentials; Multinational enterprises; Foreign ownership;

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References

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  1. Brian Aitken & Ann Harrison & Robert E. Lipsey, 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela and the United States," NBER Working Papers 5102, National Bureau of Economic Research, Inc.
  2. Conyon, Martin J, et al, 2002. "The Productivity and Wage Effects of Foreign Acquisition in the United Kingdom," Journal of Industrial Economics, Wiley Blackwell, vol. 50(1), pages 85-102, March.
  3. Pfaffermayr, Michael & Bellak, Christian, 2000. "Why foreign-owned firms are different : a conceptual framework and empirical evidence for Austria," HWWA Discussion Papers 115, Hamburg Institute of International Economics (HWWA).
  4. 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.
  5. Girma, Sourafel & Greenaway, David & Wakelin, Katharine, 2001. "Who Benefits from Foreign Direct Investment in the UK?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 119-33, May.
  6. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
  7. Karpaty, Patrik, 2004. "Are foreign owned firms more productive? Evidence from Swedish firm data," Working Papers 2004:6, Örebro University, School of Business.
  8. Sourafel Girma & David Greenaway & Richard Kneller, 2004. "Does Exporting Increase Productivity? A Microeconometric Analysis of Matched Firms," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 855-866, November.
  9. Fredrik Sjöholm & Robert E. Lipsey, 2006. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 201-221.
  10. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  11. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  12. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, December.
  13. Girma, Sourafel & Görg, Holger, 2003. "Evaluating the Causal Effects of Foreign Acquisition on Domestic Skilled and Unskilled Wages," IZA Discussion Papers 903, Institute for the Study of Labor (IZA).
  14. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
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Cited by:
  1. 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.
  2. Roger, Bandick & Hansson, Pär, 2005. "Inward FDI and Demand for Skills in Sweden," Working Paper Series 208, Trade Union Institute for Economic Research.
  3. Lundborg, Per, 2005. "Wage Theories for the Swedish Labour Market," Working Paper Series 207, Trade Union Institute for Economic Research.
  4. Lejour, Arjan & Rojas Romasgosa, Hugo & Rodriguez, Victor & Montalvo, Carvos & Van der Zee, Frans, 2009. "Trade costs, Openness and Productivity: Market Access at Home and Abroad," MPRA Paper 21214, University Library of Munich, Germany.
  5. Lundborg, Per, 2005. "Wage Fairness, Growth and the Utilization of R&D Workers," Working Paper Series 206, Trade Union Institute for Economic Research.

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