International Rent Sharing and Domestic Labor Markets: A Macroeconomic Analysis
Foreign-owned firms account for a significant part of output in many industrialized countries. However, compared to international trade linkages, relatively little is known about the role of foreign direct investment linkages and multinational firm behavior in the transmission of disturbances from one country to the next. Inspired by the micro- evidence on profit sharing within multinational corporations and within industries, we investigate whether a cross-border rent sharing phenomenom can be identified at the macro-level. The rent sharing hypothesis implies that an increase in foreign profitability should boost wages and/or employment in the domestic economy. Our empirical study provides evidence that international rent sharing might be an important aspect of global economic linkages. In four continental European countries and the UK, labour market conditions (wages and/or employment) are significantly affected by profitability conditions abroad. By contrast, the US labour market does not appear to be sensitive to changes in profitability in other countries, which could be explained by the still relatively modest role of foreign-owned capital in the US economy.
|Date of creation:||24 Dec 2003|
|Date of revision:|
|Note:||Type of Document - pdf; prepared on PC Win98; to print on A4 page format; pages: 28; figures: within document|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fathi Fakhfakh & Felix FitzRoy, 2002.
"Basic Wages and Firm Characteristics: Rent-sharing in Frensh Manufacturing,"
CRIEFF Discussion Papers
0203, Centre for Research into Industry, Enterprise, Finance and the Firm.
- Fathi Fakhfakh & Felix FitzRoy, 2004. "Basic Wages and Firm Characteristics: Rent Sharing in French Manufacturing," LABOUR, CEIS, vol. 18(4), pages 615-631, December.
- F. Fakhfakh & F. Fitzroy, 2003. "Basic Wages and Firm Characteristics : Rent-sharing in French Manufacturing," Working Papers ERMES 0311, ERMES, University Paris 2.
- Frank A.G. den Butter & Robert H.J. Mosch, 2003.
"The Dutch Miracle: Institutions, Networks, and Trust,"
Journal of Institutional and Theoretical Economics (JITE),
Mohr Siebeck, Tübingen, vol. 159(2), pages 362-, June.
- Butter, Frank A.G. den & Mosch, Robert H.J., 2001. "the Dutch miracle: institutions, networks and trust," Serie Research Memoranda 0018, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Pedro S. Martins, 2008.
"Rent Sharing Before and After the Wage Bill,"
12, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
- Pedro S. Martins, 2004. "Rent Sharing Before and After the Wage Bill," Discussion Paper Series, Department of Economics 200405, Department of Economics, University of St. Andrews.
- Martins, Pedro S., 2004. "Rent Sharing Before and After the Wage Bill," IZA Discussion Papers 1376, Institute for the Study of Labor (IZA).
- David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1996.
"Wages, Profits, and Rent-Sharing,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 111(1), pages 227-251.
- R-P. Berben & W.J. Jansen, 2001.
"Comovement in International Equity Markets: a Sectoral View,"
MEB Series (discontinued)
2001-11, Netherlands Central Bank, Monetary and Economic Policy Department.
- Berben, Robert-Paul & Jansen, W. Jos, 2005. "Comovement in international equity markets: A sectoral view," Journal of International Money and Finance, Elsevier, vol. 24(5), pages 832-857, September.
- Robert-Paul Berben & W. Jos Jansen, 2003. "Comovement in international equity markets: A sectoral view," Finance 0310001, EconWPA.
- John W. Budd & Matthew J.Slaughter, 2000. "Are Profits Shared Across Borders? Evidence on International Rent Sharing," NBER Working Papers 8014, National Bureau of Economic Research, Inc.
- Louis N. Christofides & Andrew J. Oswald, 1992.
"Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 107(3), pages 985-1002.
- L Christofides & A Oswald, 1991. "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements," CEP Discussion Papers dp0042, Centre for Economic Performance, LSE.
- W. Jos Jansen & Ad C.J. Stokman, 2004.
"Foreign Direct Investment and International Business Cycle Comovement,"
- Jansen, W. Jos & Stokman, Ad C.J., 2004. "Foreign direct investment and international business cycle comovement," Working Paper Series 0401, European Central Bank.
- W.Jos Jansen & Ad C.J.Stokman, 2003. "Foreign Direct Investment and International Business Cycle Comovement," MEB Series (discontinued) 2003-10, Netherlands Central Bank, Monetary and Economic Policy Department.
- Barrell, Ray & Pain, Nigel, 1997. "Foreign Direct Investment, Technological Change, and Economic Growth within Europe," Economic Journal, Royal Economic Society, vol. 107(445), pages 1770-86, November.
- John W. Budd & Jozef Konings & Matthew J. Slaughter, 2005.
"Wages and International Rent Sharing in Multinational Firms,"
The Review of Economics and Statistics,
MIT Press, vol. 87(1), pages 73-84, February.
- Budd, John W. & Konings, Jozef & Slaughter, Matthew J., 2002. "Wages and International Rent Sharing in Multinational Firms," IZA Discussion Papers 560, Institute for the Study of Labor (IZA).
- John W. Budd & Jozef Konings & Matthew J. Slaughter, 2002. "Wages and International Rent Sharing in Multinational Firms," William Davidson Institute Working Papers Series 522, William Davidson Institute at the University of Michigan.
- Blomström, Magnus & Globerman, Steve & Kokko, Ari, 2000. "The Determinants of Host Country Spillovers from Foreign Direct Investment," CEPR Discussion Papers 2350, C.E.P.R. Discussion Papers.
- Jeroen J. M. Kremers & Neil R. Ericsson & Juan J. Dolado, 1992.
"The power of cointegration tests,"
International Finance Discussion Papers
431, Board of Governors of the Federal Reserve System (U.S.).
- Arai, Mahmood, 1999.
"Wages, Profits and Capital Intensity: Evidence from Matched Worker-Firm Data,"
Research Papers in Economics
1999:3, Stockholm University, Department of Economics.
- Mahmood Arai, 2003. "Wages, Profits, and Capital Intensity: Evidence from Matched Worker-Firm Data," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 593-618, July.
- Oswald, Andrew, 1996. "Rent-Sharing in the Labor Market," The Warwick Economics Research Paper Series (TWERPS) 474, University of Warwick, Department of Economics.
- Budd, John W & Konings, Jozef & Slaughter, Matthew, 2002.
"International Rent Sharing in Multinational Firms,"
CEPR Discussion Papers
3326, C.E.P.R. Discussion Papers.
- John W. Budd & Josef Konings & Matthew J. Slaughter, 2002. "International Rent Sharing in Multinational Firms," NBER Working Papers 8809, National Bureau of Economic Research, Inc.
- 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).
- Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature," IMF Working Papers 01/175, International Monetary Fund.
- Louis N. Christofides & Andrew J. Oswald, 1989. "Real Wage Determinatioan in Collective BArgaining Agreements," NBER Working Papers 3188, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:0312008. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.