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The Inter-Industry Wage Structure of U.S. Multinationals

  • Pedro Martins

    ()

    (Queen Mary, University of London, and IZA, Bonn)

Little is known about wage determination by multinationals, despite the much-discussed role of globalisation upon wage dispersion. Here we examine industry- and host-country-specific 1998 data on compensation of foreign affiliates of U.S. firms and compare that with U.S. labour-market data. We find substantial differences in employment distributions, that the inter-industry wage structure of US affiliates is less dispersed than the same structure in the U.S. and that the two industry wage premia are moderately correlated. We argue that these findings are consistent with the vertical model of FDI but less so with claims that multinationals increase wage inequality.

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File URL: http://www.accessecon.com/pubs/EB/2005/Volume10/EB-04J30005A.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 10 (2005)
Issue (Month): 1 ()
Pages: 1-7

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Handle: RePEc:ebl:ecbull:eb-04j30005
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  1. Budd, John W & Konings, Jozef & Slaughter, Matthew, 2002. "International Rent Sharing in Multinational Firms," CEPR Discussion Papers 3326, C.E.P.R. Discussion Papers.
  2. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
  3. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-44, September.
  4. 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.
  5. 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).
  6. David L. Carr & James R. Markusen & Keith E. Maskus, 2001. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," American Economic Review, American Economic Association, vol. 91(3), pages 693-708, June.
  7. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
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