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Foreign Takeovers and Wage Dispersion in Hungary

  • Sándor Csengödi
  • Dieter M. Urban

This study tests FDI technology spillover models with the assumption that learning takes time against wage bargaining models by estimating the wage-premium of a foreign takeover. The technology spillover theory predicts a larger wage growth in firms taken over by foreign investors than in local firms. However, this wage growth should be confined to high-skilled workers or workers with a high level of education. Wage bargaining models also predict such a wage growth. But it should be confined to workers who are organized in trade unions, i.e. workers with low or medium level of education or skill. We apply Hungarian employee-employer matched data from 1992 until 2001, and reject the FDI technology spillover model in favor of the wage bargaining model when differentiating the wage premium by education or occupation, both by applying Mincer wage regressions and the nearest-neighbor matching method.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2188.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2188
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  1. Heyman, Fredrik & Sjöholm, Fredrik & Gustavsson Tingvall, Patrik, 2004. "Is there Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data," Working Paper Series 199, Trade Union Institute for Economic Research.
  2. Heyman, Fredrik & Sjöholm, Fredrik & Gustavsson Tingvall, Patrik, 2006. "Acquisitions, Multinationals, and Wage Dispersion," EIJS Working Paper Series 222, The European Institute of Japanese Studies.
  3. Sándor Csengödi & Rolf Jungnickel & Dieter M. Urban, 2008. "Foreign Takeovers and Wages in Hungary," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(1), pages 55-82, April.
  4. Glass, Amy Jocelyn & Saggi, Kamal, 1999. "Multinational firms and technology transfer," Policy Research Working Paper Series 2067, The World Bank.
  5. John W. Budd & Jozef Konings & Matthew J. Slaughter, . "International Rent Sharing in Multinational Firms," Working Papers 0202, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
  6. Görg, Holger & Strobl, Eric & Walsh, Frank, 2007. "Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training," CEPR Discussion Papers 6171, C.E.P.R. Discussion Papers.
  7. Almeida, Rita, 2007. "The labor market effects of foreign owned firms," Journal of International Economics, Elsevier, vol. 72(1), pages 75-96, May.
  8. Gabor Kertesi & Janos Kollo, 2001. "Economic transformation and the revaluation of human capital - Hungary, 1986-1999," Budapest Working Papers on the Labour Market 0104, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  9. Dieter M. Urban, 2010. "FDI, Technology Spillovers, and Wages," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 443-453, 08.
  10. Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2007. "Foreign Firms, Domestic Wages," NBER Working Papers 13001, National Bureau of Economic Research, Inc.
  11. Ashoka Mody & Assaf Razin & Efraim Sadka, 2003. "The Role of Information in Driving FDI Flows: Host-Country Tranparency and Source Country Specialization," NBER Working Papers 9662, National Bureau of Economic Research, Inc.
  12. J. David Brown & John Earle & Almos Telegdy, 2005. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," CERT Discussion Papers 0508, Centre for Economic Reform and Transformation, Heriot Watt University.
  13. Andrews, Martyn J. & Bellmann, Lutz & Schank, Thorsten & Upward, Richard, 2007. "The Takeover and Selection Effects of Foreign Ownership in Germany : An Analysis Using Linked Worker-Firm Data," Discussion Papers 50, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  14. J. David Brown & John S. Earle & Almos Telegdy, 2005. "Does Privatization Hurt Workers? Lessons from Comprehensive Manufacturing Firm Panel Data in Hungary, Romania, Russia, and Ukraine," Upjohn Working Papers and Journal Articles 05-125, W.E. Upjohn Institute for Employment Research.
  15. Dehejia, Rajeev, 2005. "Practical propensity score matching: a reply to Smith and Todd," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 355-364.
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