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Using data set for Ghana manufacturing, shows that foreign firms pay higher wages than domestic firms to workers that receive on the job training.
Foreign-owned firms are often hypothesized to generate productivity "spillovers" to the host country, but both theoretical micro-foundations and empirical evidence for this are limited. We develop a heterogeneous-firm model in which ex-ante identical workers learn from their employers in proportion to the firm's productivity. Foreign-owned firms have, on average, higher productivity in equilibrium due to entry costs, which means that low-productivity foreign firms cannot enter. Foreign firms have higher wage growth and, with some exceptions, pay higher average wages, but not when compared to similarly large domestic firms. The empirical implications of the model are tested on matched employer-employee data from Denmark. Consistent with the theory, we find considerable evidence of higher wages and wage growth in large and/or foreign-owned firms. These effects survive controlling for individual characteristics, but, as expected, are reduced significantly when controlling for unobservable firm heterogeneity. Furthermore, acquired skills in foreign-owned and large firms appear to be transferable to both subsequent wage work and self-employment.
Foreign-owned establishments in the United States pay higher wages, on average, than domestically-owned establishments. The foreign-owned establishments tend to be in higher-wage industries and also to pay higher wages within industries. They tend to locate in lower-wage states, but to pay more than domestically-owned firms within industries within states. Wages in general and wages in domestically-owned establishments tend to be higher in states and industries in which foreign-owned establishments account for a larger proportion of employment. Foreign-owned establishments that were new in 1990, mostly takeovers, had lower than average wage levels in that year but larger increases between 1990 and 1991. Increases in sales per worker and average wages were larger where employment growth was lower, possibly an indication that lower-productivity, lower-wage workers were dropped by the new owners.
This paper explores the relationship between wages and foreign investment in Mexico, Venezuela, and the United States. Despite very different economic conditions and levels of development, we find one fact which is robust across all three countries: higher levels of foreign investment are associated with higher wages. In Mexico and Venezuela, foreign investment was associated with higher wages only for foreign-owned firms -- there is no evidence of wage spillovers leading to higher wages for domestic firms. In the United States there is evidence of wage spillovers. The lack of spillovers in Mexico and Venezuela is consistent with significant wage differentials between foreign and domestic enterprises. In the United States, wage differentials are smaller.
This paper uses data on individual wages in manufacturing industry for five African countries in the early 1990s to test whether firms owned by foreigners pay higher wages than do forms owned by locals for apparently equivalent workers, and whether such benefits accrue to all or only certain types of workers. We present two main findings. First, foreign ownership is associated with a 20-40 per cent increase in individual wages (conditional on age, tenure and education) on average. This is halved to 8-23 per cent if we take into account the fact that foreign-owned firms are larger and locate in high-wage sectors and regions. Secondly, there is a tendency in some countries for more skilled workers (using occupation and education categories) to benefit more from foreign ownership than less skilled workers, and this conclusion holds after accounting for the size distribution of foreign firms. We discuss, but cannot directly test, the plausibility of two explanations for these findings: 1) foreign-owned firms employ technologies that are more skill-biased than technologies in local firms and 2) skilled workers in foreign firms are more effective in rent-sharing than other workers. We contend that these explanations may not be mutually exclusive, hence cannot be empirically distinguished.