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Multinational Companies and Wage Inequality in the Host Country: The Case of Ireland

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  • Paolo Figini
  • Holger Görg

Abstract

In this paper, we analyse the effects of multinational companies on wage inequality in the host country, studying the case of the Irish economy. Based on a model developed by Aghion and Howitt (1998), in which the introduction of new technologies leads to increasing demand for skilled labour and, therefore, to rising inequality, we conduct an econometric study using data for the Irish manufacturing sector between 1979 and 1995. We examine inequality between wages for skilled and unskilled labour within the same manufacturing sector. Our results indicate that there is an inverted-U relationship between wage inequality and the presence of multinationals, i.e., with increasing presence of multinationals, wage inequality first increases, reaches a maximum and decreases eventually, ceteris paribus.

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Bibliographic Info

Paper provided by Trinity College Dublin, Department of Economics in its series Economics Technical Papers with number 9816.

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Date of creation: 1998
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Handle: RePEc:tcd:tcduet:9816

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Postal: Trinity College, Dublin 2
Phone: (+ 353 1) 6081325
Fax: 6772503
Web page: http://www.tcd.ie/Economics/
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  1. Jonathan Haskel & Matthew J. Slaughter, 1999. "Trade, Technology and U.K. Wage Inequality," NBER Working Papers 6978, National Bureau of Economic Research, Inc.
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  4. Bob Anderton & Paul Brenton, 1998. "The dollar, trade, technology and inequality in the USA," National Institute Economic Review, National Institute of Economic and Social Research, vol. 166(1), pages 78-86, October.
  5. Paolo Figini & Holger Görg, 1998. "Multinational Companies and Wage Inequality in the Host Country: The Case of Ireland," Economics Technical Papers 9816, Trinity College Dublin, Department of Economics.
  6. Das, Sanghamitra, 1987. "Externalities, and technology transfer through multinational corporations A theoretical analysis," Journal of International Economics, Elsevier, vol. 22(1-2), pages 171-182, February.
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