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Do Former Employees of Foreign MNEs Boost Incumbent Workers’ Wages in Domestic Firms?

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  • Eóin T. Flaherty

Abstract

This paper examines evidence on wage spillovers from workers with experience in foreign multinational enterprises (MNEs) to incumbent workers in domestic firms. Using administrative panel data from Ireland, I examine possible heterogeneity for such spillovers across the wage distribution using quantile regressions. I begin by using existing methodology and find that, once industry-year and region-year dummies are added as control variables, the average wage spillover effect on incumbents from former foreign MNE workers moving to domestic firms disappears. The quantile results suggest that there are positive spillovers for incumbent workers in the top 40 percent of the wage distribution only. This indicates that foreign MNEs increase inequality through spillovers to domestic firms via labour mobility.

Suggested Citation

  • Eóin T. Flaherty, 2022. "Do Former Employees of Foreign MNEs Boost Incumbent Workers’ Wages in Domestic Firms?," Working Papers 202208, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:202208
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    File URL: http://hdl.handle.net/10197/12781
    File Function: First version, 2022
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    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
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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