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Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data

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Author Info
Heyman, Fredrik () (Research Institute of Industrial Economics)
Gustavsson Tingvall, Patrik () (Stockholm School of Economics)
Sjöholm, Fredrik () (Stockholm School of Economics)

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Abstract

Numerous studies on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages.

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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 674.

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Length: 36 pages
Date of creation: 14 Nov 2006
Date of revision:
Publication status: Published in Journal of International Economics, 2007, pages 355-376.
Handle: RePEc:hhs:iuiwop:0674

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Related research
Keywords: FDI; Foreign Ownership; Wages; Matched Employer-Employee Data; Propensity Score Matching;

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
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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Full references

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. 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!]
  2. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics. [Downloadable!]
  3. Pedro S. Martins, 2008. "Paying More to Hire the Best? Foreign Firms, Wages and Worker Mobility," Working Papers 17, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research. [Downloadable!]
    Other versions:
  4. Sarianna M. Lundan, 2007. "The Home Country Effects of Internationalisation," Discussion Papers 1100, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Martins, Pedro S. & Esteves, Luiz A., 2008. "Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers," IZA Discussion Papers 3542, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Pehr-Johan Norbäck & Lars Persson, 2008. "Cross-Border Mergers & Acquisitions Policy in Service Markets," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 269-293, December. [Downloadable!] (restricted)
    Other versions:
  7. Heyman, Fredrik & Gustavsson Tingvall, Patrik & Sjöholm, Fredrik, 2006. "Acquisitions, Multinationals and Wage Dispersion," Working Paper Series 675, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  8. Sébastien Breau & David L. Rigby, 2006. "Is There Really an Export Wage Premium? A Case Study of Los Angeles Using Matched Employee-Employer Data," Working Papers 06-06, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  9. Anna Karolina Selhorst Bezerra & Luciano Nakabashi, 2008. "O Programa Comunidade Escola e seus impactos sobre a violência entre Crianças e Jovens," Working Papers 0076, Universidade Federal do Paraná, Department of Economics. [Downloadable!]
  10. Csengodi, Sandor & Jungnickel, Rolf & Urban, Dieter, 2005. "Foreign Takeovers and Wages: Theory and Evidence from Hungary," Discussion Paper Series 26278, Hamburg Institute of International Economics. [Downloadable!]
    Other versions:
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