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Foreign Takeovers and Wages: Theory and Evidence from Hungary

Author

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  • Csengődi, Sándor
  • Jungnickel, Rolf
  • Urban, Dieter M.

Abstract

This study discriminates FDI technology spillover from learning effects. Whenever learning takes time, our model predicts that foreign investors deduct the economic value of learning from wages of inexperienced workers and add it to experienced ones to prevent them from moving to local competitors. Hence, the national wage bill is unaffected by foreign takeovers. In contrast to learning, technology spillover effects occur whenever a worker with MNE experience contributes more to local firms' than to MNEs' productivity. In this case, experienced MNE workers are hired by local firms and the host country obtains a welfare gain. We investigate empirically wages, productivity, and worker turnover during the course of foreign takeovers on employee-employer matched data of Hungary and find evidence consistent with learning, but not with FDI technology spillovers.

Suggested Citation

  • Csengődi, Sándor & Jungnickel, Rolf & Urban, Dieter M., 2005. "Foreign Takeovers and Wages: Theory and Evidence from Hungary," HWWA Discussion Papers 337, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwwadp:26278
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Karl-Markus Modén & Pehr-Johan Norbäck & Lars Persson, 2008. "Efficiency and Ownership Structure: The Case of Poland," The World Economy, Wiley Blackwell, vol. 31(3), pages 437-460, March.
    2. Sándor Csengödi & Rolf Jungnickel & Dieter M. Urban, 2008. "Foreign Takeovers and Wages in Hungary," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(1), pages 55-82, April.
    3. Dieter M. Urban, 2010. "FDI, Technology Spillovers, and Wages," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 443-453, August.

    More about this item

    Keywords

    FDI; foreign takeover; cross-border M&A; wage regression; employeeemployer matched data ; propensity score matching ; FDI technology spillover;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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