Foreign Ownership and Wages in the United States, 1987 - 1992

Foreign-owned establishments in the United States pay higher wages, on average, than domestically-owned establishments. Much of the difference is related to industry composition, but there are also differences within industries within states, 5-7 percent in manufacturing and 9-10 percent in other industries. Within manufacturing, the difference can all be related to establishment, state, and industry characteristics, but in other industries, a substantial difference in average wages in favor of foreign establishments remains even when these other determinants of wages are taken into account. Within manufacturing, the extent of foreign ownership in an industry in a state had no impact on wages in 1987 when these other factors were taken into account, but it was associated with higher wages in 1992. Outside of manufacturing, higher foreign ownership was associated with higher wages in both years, and in 1992, even with higher-wages in domestically-owned establishments. Outside of manufacturing, larger increases in foreign ownership in an industry in a state between 1987 and 1992 were associated with larger increases in average wages. The wage effect was confined to the foreign-owned establishments themselves.