CEPII, Recherche et Expertise sur l'economie mondiale
The Multinational Wage Premium and Wage Dynamics


Gianluca Orefice
Nicholas Sly
Farid Toubal

 Highlights :
  • Document a distinct U-shaped pattern in worker-level wages surrounding the time their employer is acquired by a foreign firm.
  • Use detailed administrative data linking French firms and workers over the years 2002-2007.
  • Present a model of fair wage considerations among workers and endogenous cross-border acquisition activity that predicts this U-shaped pattern, and characterizes the selection of domestic targets for acquisition by an MNE.
  • Show that the dip in earnings is evident in both wages and in-kind payments given to workers.
  • Our findings stands in contrast to prior work suggesting MNEs have no significant relationship with wages paid to employees.

 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 in years just before domestic firms switch to MNE status. The dip in earnings is evident in both wages and in-kind payments given to workers. To guide our empirical approach, we present a simple model with fair wage considerations among workers and endogenous cross-border acquisition activity that predicts this U-shaped pattern, and characterizes the selection of domestic targets for acquisition by an MNE.

 Keywords : multinational enterprises | wage premium | in-kind payments | fair wages

 JEL : F66, F14, F23
CEPII Working Paper
N°2015-27, December 2015

Full text

Reference
BibTeX (with abstract),
plain text (with abstract),
RIS (with abstract)

Contact: 
Back