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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. 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.
  2. 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.
  3. John W. Budd & Josef Konings & Matthew J. Slaughter, 2002. "International Rent Sharing in Multinational Firms," NBER Working Papers 8809, National Bureau of Economic Research, Inc.
  4. Brian Aitken & Ann Harrison & Robert E. Lipsey, 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela and the United States," NBER Working Papers 5102, National Bureau of Economic Research, Inc.
  5. Pedro S. Martins, 2004. "Do Foreign Firms Really Pay Higher Wages? : Evidence from Different Estimators," CRIEFF Discussion Papers 0409, Centre for Research into Industry, Enterprise, Finance and the Firm.
  6. 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.
  7. 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.
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