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MNEs and Wages : the Role of Productivity Spillovers and Imperfect Labor Market

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  • Bahar Bayraktar Saglam
  • Selin Sayek

Abstract

Disentangling the labor market implications of increased foreign capital flows remains important. This paper provides a unifying framework allowing to study the wage implications of multinational enterprise (MNE) activities, pointing to the importance of controlling for both labor market imperfections and productivity spillovers from foreign to local firms. Results show that increased MNE activities increase average wages in the local economy while contributing to a larger wage dispersion between the MNE and local firms. While the results pertaining to average wages depends heavily on the frictions in the labor market, how much the wage dispersion alters also depends on the extent of productivity spillovers from the MNEs to the local firms and the complementarity between domestic and foreign capital.
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Suggested Citation

  • Bahar Bayraktar Saglam & Selin Sayek, 2010. "MNEs and Wages : the Role of Productivity Spillovers and Imperfect Labor Market," Working Papers 1002, Department of Economics, Bilkent University.
    • Handle: RePEc:bil:wpaper:1002
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    Cited by:

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    2. Meltem Ucal & Alfred Albert Haug & Mehmet Hüseyin Bilgin, 2016. "Income inequality and FDI: evidence with Turkish data," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 1030-1045, March.
    3. Somdeep Chatterjee, 2016. "The role of the firm in worker wage dispersion: an analysis of the Ghanaian manufacturing sector," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-16, December.
    4. Thi-Nham Le & Thanh-Tuan Dang, 2022. "An Integrated Approach for Evaluating the Efficiency of FDI Attractiveness: Evidence from Vietnamese Provincial Data from 2012 to 2022," Sustainability, MDPI, vol. 14(20), pages 1-25, October.

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    More about this item

    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

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