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Do former employees of foreign MNEs boost incumbent workers’ wages in domestic firms?

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  • Eoin T. Flaherty

    (University College Dublin and the Central Statistics Office)

Abstract

This paper examines whether there are wage spillovers from workers with experience in foreign multinational enterprises (MNEs) to incumbent workers in domestic firms. Using administrative panel data from Ireland, I examine possible heterogeneity for such spillovers across the wage distribution using quantile regressions. I begin by using existing methodology and find that, once industry-year and region-year dummies are added as control variables, the average wage spillover effect on incumbents from former foreign MNE workers moving to domestic firms disappears. Quantile regression results suggest that there are positive spillovers for incumbent workers in the top 50% of the wage distribution only. This indicates that foreign MNEs increase inequality through spillovers to domestic firms via labour mobility.

Suggested Citation

  • Eoin T. Flaherty, 2024. "Do former employees of foreign MNEs boost incumbent workers’ wages in domestic firms?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(4), pages 1615-1655, November.
    • Handle: RePEc:spr:weltar:v:160:y:2024:i:4:d:10.1007_s10290-024-00552-6
    DOI: 10.1007/s10290-024-00552-6
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    More about this item

    Keywords

    Foreign direct investment; Spillovers; Labour mobility; Linked employer-employee data; Wages;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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