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The Multinational Wage Premium and Wage Dynamics

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  • Gianluca Orefice
  • Nicholas Sly
  • Farid Toubal

Abstract

Using detailed administrative data linking French firms and workers over the years 2002-2007, we document a distinct U-shaped pattern in worker-level wages surrounding the time their employer is acquired by a foreign firm, with a dip in earnings observed for several years before domestic firms switch to MNE status. This pre-acquisition decline in earnings can partly explain why prior evidence found no impact of foreign ownership on worker-level wages. Accounting for the pre-acquisition earnings dip and other confounding wage dynamics we find that MNEs increase remuneration to workers by 4.8% initially, and by 6%-8% after several years. Unique information about in-kind payments reveals that bonuses and other non-monetary remuneration also exhibit a U-shaped pattern surrounding foreign acquisition.

Suggested Citation

  • Gianluca Orefice & Nicholas Sly & Farid Toubal, 2015. "The Multinational Wage Premium and Wage Dynamics," CESifo Working Paper Series 5263, CESifo.
    • Handle: RePEc:ces:ceswps:_5263
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    2. Carlo Perroni & Davide Suverato, 2023. "Skills scarcity and export intensity," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 719-757, May.
    3. Hartmut Egger & Elke J. Jahn & Udo Kreickemeier, 2018. "Distance and the Multinational Wage Premium," CESifo Working Paper Series 7347, CESifo.
    4. Jonas Hjort & Xuan Li & Heather Sarsons, 2020. "Random-Coefficients Logit Demand Estimation with Zero-Valued Market Shares," Working Papers 2020-15, Becker Friedman Institute for Research In Economics.

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    More about this item

    Keywords

    multinational enterprises; wage premium; in-kind payments;
    All these keywords.

    JEL classification:

    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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