Is there really a foreign ownership wage premium? Evidence from matched employer–employee data

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Numerous studies on firm-level data have reported higher average wages in foreignowned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker's wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages. Terms of use: Documents in JEL: F23, J31, C23

Foreign Takeovers and Wages in Hungary

“…Hence, the environment is fertile to firm-level rent sharing. This is in contrast to the studies of Martins (2004) and Heyman et al (2007) on Portugal and Sweden, respectively, where wages are much more inflexible.…”

“…And the third is the Hotelling test on quintiles that tests balancing within each quintile over all variables jointly. According to Dehejia (2005), we deem the matching estimation to be robust if a slight change in the logit selection equation does not over-7 These are similar to the ones used by Heyman et al (2007) and Görg and Girma (2007). However, we do not have firm age in our data set, nor do we have information on assisted area status.…”

“…11 In particular, we have information on the called-up share of capital and the equity share of different types of owners (foreign, domestic private or state ownership 12 ). We define a firm to be foreign owned if the share of foreign owners in the called-up share of capital exceeds 50 percent following Heyman et al (2007). This choice is justified by the objective to test technology spillover theories.…”

“…We follow Görg and Girma (2007) and Heyman et al (2007) and exclude them. 14 We have 346,674 full-time employee observations of 7,198 different firms in our ten-year panel all together.…”

“…The former method was applied in a similar context to Eastern European and Russian privatizations by Brown et al (2006). The latter method was applied by Martins (2004), Huttunen (2005), Görg and Girma (2007), and Heyman et al (2007) to investigate the wage premium in Portugal, Finland, the United Kingdom, and Sweden, respectively.…”