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Foreign-owned firms and the gender wage gap: Does cultural transmission matter?

Author

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  • Rita Pető

    (HUN-REN Centre for Economic and Regional Studies)

Abstract

This paper examines how foreign direct investment (FDI) influences the gender wage gap, using matched employer-employee data from Hungary between 2003 and 2017. I find that foreign-owned firms exhibit a 4 percentage points larger within-firm gender wage gap compared to domestic firms, even after accounting for worker- and firm-level selection. This gap persists even after foreign capital withdraws, suggesting a lasting structural imprint. Furthermore, the results highlight the role of cultural norms: subsidiaries of companies from countries with more favorable economic opportunities for women show significantly smaller gender disparities. Greater wage-setting flexibility is also associated with a wider gender wage gap, especially among new hires. Overall, the study demonstrates that foreign ownership not only affects wage structures through economic channels but also transmits cultural norms that shape gender inequality in the labor market.

Suggested Citation

  • Rita Pető, 2025. "Foreign-owned firms and the gender wage gap: Does cultural transmission matter?," CERS-IE WORKING PAPERS 2509, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2509
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    Keywords

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    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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