Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers

Pedro Martins and Luiz Esteves

No 15, Working Papers from Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research

Abstract: How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small.

Keywords: Foreign Direct Investment; Ownership Changes; Worker Mobility (search for similar items in EconPapers)
JEL-codes: F23 J31 J63 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers (2008)
Working Paper: Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers (2008)
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