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FDI and Wages: Evidence from Firm-Level and Linked Employer-Employee Data in Hungary, 1986-2008

Author

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  • Earle, John S.

    () (George Mason University)

  • Telegdy, Álmos

    () (Central European University)

  • Antal, Gábor

    () (Central European University)

Abstract

We estimate the wage effects of foreign direct investment (FDI) with universal firm-level and linked employer-employee panel data containing 4,926 foreign acquisitions in Hungary. Matching on pre-acquisition data and controlling for fixed effects for firms and detailed worker groups, we find 12-28 percent effects on average wages. The wage effect mostly reverses for 983 foreign acquisitions later divested to domestic owners. We find positive effects for all worker types, occupations, and wage quantiles. The evidence implies little role for either measurement problems or residual selection, but suggests a strong cross-firm association of FDI wage premia with similar differentials in productivity.

Suggested Citation

  • Earle, John S. & Telegdy, Álmos & Antal, Gábor, 2012. "FDI and Wages: Evidence from Firm-Level and Linked Employer-Employee Data in Hungary, 1986-2008," IZA Discussion Papers 7095, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7095
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Telegdy, Álmos, 2013. "The Effect of Public Wages on Corporate Compensation in Hungary," IZA Discussion Papers 7524, Institute for the Study of Labor (IZA).
    2. Telegdy, Álmos, 2013. "A közszféra és a vállalatok bérei közötti átterjedési hatás Magyarországon
      [Public-sector pay spillovers in Hungary: Identification from a large sectoral pay increase]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 555-578.

    More about this item

    Keywords

    foreign acquisitions; FDI; earnings; wage differentials; productivity; difference-in-differences matching; employer effects; Hungary;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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