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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Nottingham, GEP in its series Discussion Papers with number 10/21.
Date of creation:
Date of revision:
Contact details of provider:
Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/gep/index.aspx
More information through EDIRC
Foreign direct investment; foreign wage premia;
Other versions of this item:
- Hijzen, Alexander & Martins, Pedro S. & Schank, Thorsten & Upward, Richard, 2010. "Do Foreign-Owned Firms Provide Better Working Conditions Than Their Domestic Counterparts? A Comparative Analysis," IZA Discussion Papers 5259, Institute for the Study of Labor (IZA).
- 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
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.:
- Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2013.
"Foreign Firms, Domestic Wages,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 115(2), pages 292-325, 04.
- Malchow-Møller, Nikolaj & Markusen, James R. & Schjerning, Bertel, 2007. "Foreign Firms, Domestic Wages," CEPR Discussion Papers 6292, C.E.P.R. Discussion Papers.
- Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2009. "Foreign Firms, Domestic Wages," CAM Working Papers 2009-02, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
- 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.
- 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.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hilary Hughes).
If references are entirely missing, you can add them using this form.