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Multinational firms and heterogeneous labor

Listed author(s):
  • Larch, Mario
  • Lechthaler, Wolfgang

In the presence of increasing specialization of workers it becomes more and more difficult for firms to find the most suitable workers. In such an environment a multinational corporation has an advantage because it can exchange workers between plants in different countries. In this way it can draw on a larger labor market pool, reducing the mismatch of its workforce. This paper analyzes the consequences of this advantage for production, employment and, most prominently, wages. We are able to disentangle the effects of worker heterogeneity and firm heterogeneity on wages and show that the latter is important to explain why multinationals typically pay higher wages.

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File URL: https://www.econstor.eu/bitstream/10419/24848/1/579557766.PDF
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Paper provided by Kiel Institute for the World Economy (IfW) in its series Kiel Working Papers with number 1454.

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Date of creation: 2008
Handle: RePEc:zbw:ifwkwp:1454
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  9. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
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  13. Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2009. "Foreign Firms, Domestic Wages," CAM Working Papers 2009-02, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  14. Pedro S. Martins, 2004. "Do Foreign Firms Really Pay Higher Wages? : Evidence from Different Estimators," CRIEFF Discussion Papers 0409, Centre for Research into Industry, Enterprise, Finance and the Firm.
  15. Davidson, Carl & Matusz, Steven J. & Shevchenko, Andrei, 2008. "Globalization and firm level adjustment with imperfect labor markets," Journal of International Economics, Elsevier, vol. 75(2), pages 295-309, July.
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  17. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  18. HAMILTON, Jonathan & THISSE, Jacques-François & ZENOU, Yves, "undated". "Wage competition with heterogeneous workers and firms," CORE Discussion Papers RP 1463, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  19. Zhao, Laixun, 1998. "The Impact of Foreign Direct Investment on Wages and Employment," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 284-301, April.
  20. Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany.
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