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Paying More To Hire The Best? Foreign Firms, Wages, And Worker Mobility

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  • PEDRO S. MARTINS

Abstract

In the context of the debate on the labour-market consequences of globalisation, we examine worker mobility in order to identify the wage differences between foreign and domestic firms. Using matched employer-employee panel data for Portugal, we consider virtually all spells of interfirm mobility over a period of ten years. We find that foreign firms offer significantly more generous wage policies, although there is also a (smaller) selection effect. The results are robust to the consideration of wage growth differences, the case of displaced workers and different subsets of workers.
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Suggested Citation

  • Pedro S. Martins, 2011. "Paying More To Hire The Best? Foreign Firms, Wages, And Worker Mobility," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 349-363, April.
  • Handle: RePEc:bla:ecinqu:v:49:y:2011:i:2:p:349-363
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    References listed on IDEAS

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    1. Melissa Bjelland & Bruce Fallick & John Haltiwanger & Erika McEntarfer, 2011. "Employer-to-Employer Flows in the United States: Estimates Using Linked Employer-Employee Data," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(4), pages 493-505, October.
    2. Aitken, Brian & Harrison, Ann & Lipsey, Robert E., 1996. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," Journal of International Economics, Elsevier, vol. 40(3-4), pages 345-371, May.
    3. Fosfuri, Andrea & Motta, Massimo & Ronde, Thomas, 2001. "Foreign direct investment and spillovers through workers' mobility," Journal of International Economics, Elsevier, vol. 53(1), pages 205-222, February.
    4. Heyman, Fredrik & Sjoholm, Fredrik & Tingvall, Patrik Gustavsson, 2007. "Is there really a foreign ownership wage premium? Evidence from matched employer-employee data," Journal of International Economics, Elsevier, vol. 73(2), pages 355-376, November.
    5. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    6. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
    7. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    8. Pedro S. Martins, 2007. "Heterogeneity In Real Wage Cyclicality," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 684-698, November.
    9. Pedro S. Martins & Luiz A. Esteves, 2008. "Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers," Working Papers 15, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    10. Martyn Andrews, & Lutz Bellmann, & Thorsten Schank, & Richard Upward, "undated". "The takeover and selection effects of foreign ownership in Germany: an analysis using linked worker-firm data," Discussion Papers 07/08, University of Nottingham, GEP.
    11. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    12. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    13. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    14. Martins, Pedro S., 2004. "Do Foreign Firms Really Pay Higher Wages? Evidence from Different Estimators," IZA Discussion Papers 1388, Institute for the Study of Labor (IZA).
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    Citations

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    Cited by:

    1. Martins, Pedro S. & Opromolla, Luca David, 2009. "Exports, Imports and Wages: Evidence from Matched Firm-Worker-Product Panels," IZA Discussion Papers 4646, Institute for the Study of Labor (IZA).
    2. Gianluca Orefice & Nicholas Sly & Farid Toubal, 2015. "The Multinational Wage Premium and Wage Dynamics," Working Papers 2015-27, CEPII research center.
    3. Pedro S. Martins, 2015. "The Diversity of Personnel Practices and Firm Performance," Working Papers 62, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    4. Ayumu Tanaka, "undated". "Why Do Exporters and Multinational Firms Pay Higher Wages?:Evidence from Japanese Linked Employer–Employee Data," Discussion papers e-17-013, Graduate School of Economics , Kyoto University.
    5. Stockinger, Bastian & Wolf, Katja, 2016. "The productivity effects of worker mobility between heterogeneous firms," IAB Discussion Paper 201607, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. John S. Earle & Almos Telegdy & Gabor Antal, 2012. "FDI and Wages: Evidence from Firm-Level and Linked Employer-Employee Data in Hungary, 1986-2008," Budapest Working Papers on the Labour Market 1209, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    7. repec:bla:worlde:v:40:y:2017:i:10:p:2056-2077 is not listed on IDEAS
    8. TANAKA Ayumu, 2015. "Wage Premiums for Exporters and Multinational Enterprises: Evidence from Japanese linked employer-employee data," Discussion papers 15106, Research Institute of Economy, Trade and Industry (RIETI).
    9. Bruno, Randolph Luca & Cipollina, Maria, 2014. "FDI Impact on Firm Performance in Enlarged Europe: Evidence from a Meta-Regression Analysis," IZA Discussion Papers 8085, Institute for the Study of Labor (IZA).
    10. Nuno Crespo & Nadia Simoes & Sandrina B. Moreira, 2014. "Gender differences in occupational mobility - evidence from Portugal," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(4), pages 460-481, July.
    11. Katariina Nilsson Hakkala & Alessandro Sembenelli, 2018. "Multinationals, competition and productivity spillovers through worker mobility," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 401-426, May.
    12. Hijzen, Alexander & Martins, Pedro S. & Schank, Thorsten & Upward, Richard, 2013. "Foreign-owned firms around the world: A comparative analysis of wages and employment at the micro-level," European Economic Review, Elsevier, vol. 60(C), pages 170-188.
    13. Mion, Giordano & Opromolla, Luca David, 2011. "Managers' Mobility, Trade Status, and Wages," CEPR Discussion Papers 8230, C.E.P.R. Discussion Papers.
    14. Nilsson Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2014. "Multinational firms, acquisitions and job tasks," European Economic Review, Elsevier, vol. 66(C), pages 248-265.
    15. Theresa M. Greaney & Yao Li, 2017. "Examining Determinants of Foreign Wage Premiums in China," The World Economy, Wiley Blackwell, vol. 40(10), pages 2056-2077, October.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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