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Does the skill intensity of the multinational enterprises matter for labor market outcomes?


  • Bahar SAĞLAM

    (hacettepe üniversitesi)


Abstract. This paper studies the labor market implications of high-tech versus low-tech foreign firms by using a heterogeneous matching model. This approach allows us to identify the effect of the different skill intensity of the foreign firm’s production on the wages of unskilled and skilled workers in the local firm. The analytical and the numerical solutions of the model reveal that both skill and firm premia depend on the cost of vacancy creation, the skill distribution in the local economy, and the technological gap between foreign and the local firms. Results of the paper suggest that increased foreign firm presence due to the reduction in the cost of foreign job creation leads to lower skill premium in high-tech foreign firm case but a higher skill premium in the low-tech foreign firm case. Further results point out that the firm premium increases as the vacancies posted by foreign firm increases, regardless of the skill intensity

Suggested Citation

  • Bahar SAĞLAM, 2010. "Does the skill intensity of the multinational enterprises matter for labor market outcomes?," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 25(294), pages 9-34.
  • Handle: RePEc:iif:iifjrn:v:25:y:2010:i:294:p:9-34

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    More about this item


    Foreign direct investment; skill premium; matching models; labor markets.;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials


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