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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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  8. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, vol. 65(1), pages 1-20, January.
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  13. Robert C. Feenstra, 2000. "Introduction to "The Impact of International Trade on Wages"," NBER Chapters, in: The Impact of International Trade on Wages, pages 1-11 National Bureau of Economic Research, Inc.
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  15. Ludema, Rodney D., 2002. "Increasing returns, multinationals and geography of preferential trade agreements," Journal of International Economics, Elsevier, vol. 56(2), pages 329-358, March.
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  18. Robert C. Feenstra, 2000. "The Impact of International Trade on Wages," NBER Books, National Bureau of Economic Research, Inc, number feen00-1.
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