Do Foreign-Owned Firms Provide Better Working Conditions Than Their Domestic Counterparts? A Comparative Analysis
AbstractThis paper analyses to what extent working conditions in foreign-owned firms differ from those in their domestic counterparts. It makes three main contributions. First, we replicate the consensus in the empirical literature by applying a standardised methodology to firm-level data for three developed (Germany, Portugal, UK) and two emerging economies (Brazil, Indonesia). We show that, consistent with previous evidence, foreign-owned firms offer substantially higher average wages than domestic firms and that this difference is particularly important in emerging economies. Second, we show that these positive wage effects of foreign takeovers reduce in size when controlling for changes in the composition of the workforce, although they tend to remain positive and statistically significant. However, the wage effects associated with worker movements from domestic to foreign firms are potentially important, particularly in emerging economies. Third, we look not only at wage outcomes but also consider other working conditions such as working hours, job stability and union coverage. We find that foreign takeovers of domestic firms tend to have a small positive effect on wages, but little effect on other aspects of working conditions.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5259.
Length: 44 pages
Date of creation: Oct 2010
Date of revision:
Publication status: published as 'Foreign-owned firms around the world: A comparative analysis of wages and employment at the micro-level' in: European Economic Review, 2013, 60, 170-188
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Other versions of this item:
- Alexander Hijzen & Pedro S. Martins & Thorsten Schank & Richard Upward, . "Do foreign-owned firms provide better working conditions than their domestic counterparts? A comparative analysis," Discussion Papers 10/21, University of Nottingham, GEP.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-06 (All new papers)
- NEP-LAB-2010-11-06 (Labour Economics)
- NEP-SEA-2010-11-06 (South East Asia)
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.:
- Malchow-Møller, Nikolaj & Markusen, James R. & Schjerning, Bertel, 2007.
"Foreign Firms, Domestic Wages,"
CEPR Discussion Papers
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- Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2007. "Foreign Firms, Domestic Wages," NBER Working Papers 13001, National Bureau of Economic Research, Inc.
- Giorgio Barba Navaretti & Daniele Checchi & Alessandro Turrini, 2002. "Adjusting Labour Demand: Multinationals vs. National Firms: A Cross-European Analysis," Development Working Papers 168, Centro Studi Luca d\'Agliano, University of Milano.
- Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, 2012.
"Foreign-owned plants and job security,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 148(1), pages 89-117, April.
- John P. Weche Geluebcke, 2011. "Foreign Ownership and Firm Performance in German Services: First Evidence based on Official Statistics," Working Paper Series in Economics 213, University of Lüneburg, Institute of Economics.
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