Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Across a wide range of specifications, we estimate a significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. This is consistent with positive FDI spillovers. We do not generally find significant effects on plant TFP of the foreign-affiliate share of activity in that plant's region. Typical estimates suggest that a 10 percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5 percent. We also use these estimates to calculate the perjob value of these spillovers. These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.

Abstract-Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions, we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Consistent with spillovers, we estimate a robust and significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. Typical estimates suggest that a 10-percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5%. We also use these estimates to calculate the per-job value of these spillovers at about £2,400 in 2000 prices ($4,300). These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.

Abstract-Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions, we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Consistent with spillovers, we estimate a robust and significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. Typical estimates suggest that a 10-percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5%. We also use these estimates to calculate the per-job value of these spillovers at about £2,400 in 2000 prices ($4,300). These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.

Using data from the British Household Panel Survey for 1991-99 and the German SocioEconomic Panel for 1984-99, the authors investigate job mobility and estimate the returns to tenure and experience. Job mobility was higher in the United Kingdom than in Germany. Returns to experience also seem to have been substantially higher in the United Kingdom, where the wage gain associated with ten years of labor market experience was around 80%, compared to 35% in Germany. The low returns to labor market experience in Germany appear to have been accountable to one group of workers: those with apprenticeship training, who tended to receive fairly high starting wages but to experience relatively low wage growth thereafter. Wage growth due to labor market experience was similar between the two countries for the other skill groups. Returns to tenure were close to zero in both countries.

From January 1, 1987, the legal minimum wage for workers aged 18 and 19 in Portugal was uprated to the full adult rate, generating a 49.3% increase between 1986 and 1987 in the legal minimum wage for this age group. This shock is used as a "natural experiment" to evaluate the impact of the minimum wage change on teenagers' employment by using a large firm level micro-data set. It is shown that by comparing the employment growth of 18-19 year old workers with their 20-25 year old counterparts one can identify the employment effects of the minimum wage hike. The same comparisons are done with 30-35 year old workers. This study finds that the rise in the minimum wage significantly reduced employment. This conclusion is reinforced by evidence showing that these employment effects are concentrated in firms more likely to be affected by the change in the law.