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Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training

In: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics

Author

Listed:
  • Holger Görg
  • Eric Strobl
  • Frank Walsh

Abstract

While foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers, the causes of this remain unresolved. In a two-period bargaining framework we show that if training is more productive and specific in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employer-employee matched data set we verify that the foreign wage premium is only acquired by workers over time spent in the firm and only by those that receive on-the-job training, thus providing empirical support for a firmspecific human capital acquisition explanation.

Suggested Citation

  • Holger Görg & Eric Strobl & Frank Walsh, 2016. "Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 3, pages 33-51, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814749237_0003
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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