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Multinational companies and wage inequality in the host country: the case of Ireland

  • Figini, Paolo
  • Görg, Holger

In this paper, we analyse the effects of multinational companies on wage inequality in the host country, studying the case of the Irish economy. Based on a model developed by Aghion and Howitt (1998), in which the introduction of new technologies leads to increasing demand for skilled labour and, therefore, to rising inequality, we conduct an econometric study using data for the Irish manufacturing sector between 1979 and 1995. We examine inequality between wages for skilled and unskilled labour within the same manufacturing sector. Our results indicate that there is an inverted-U relationship between wage inequality and the presence of multinationals, i.e., with increasing presence of multinationals, wage inequality first increases, reaches a maximum and decreases eventually, ceteris paribus.

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Paper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 2344.

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Date of creation: 1999
Date of revision:
Handle: RePEc:zbw:ifwkie:2344
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  1. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
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  8. Figini, Paolo & Görg, Holger, 1999. "Multinational companies and wage inequality in the host country: the case of Ireland," Open Access Publications from Kiel Institute for the World Economy 2344, Kiel Institute for the World Economy (IfW).
  9. Gerry Boyle; & Pauline McCormack, 1998. "Trade and Technological Explanations for Changes in Sectoral Labour Demand in OECD Economies," Economics, Finance and Accounting Department Working Paper Series n770598, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
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  19. Das, Sanghamitra, 1987. "Externalities, and technology transfer through multinational corporations A theoretical analysis," Journal of International Economics, Elsevier, vol. 22(1-2), pages 171-182, February.
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