Earnings and Employment in Foreign-Owned Firms

David Maré, Lynda Sanderson (lynda.sanderson@treasury.govt.nz) and Richard Fabling
Additional contact information
Lynda Sanderson: New Zealand Treasury

No 8541, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines remuneration and labour mobility patterns among workers in foreign-owned firms operating in New Zealand. By tracking workers as they move across jobs, we document the extent of the "foreign wage premium" distinguishing between compositional factors (eg, differences in industry and employment composition across foreign and domestic firms) and remaining differences in wage levels and growth rates. We find that much of the average earnings gap between foreign and domestically-owned firms is due to compositional factors – foreign firms tend to be larger and employ workers who would have received relatively high wages regardless of where they worked. However, even among apparently similar workers and firms, we find a two to four percent earnings gap between workers in domestic and foreign-owned firms. This gap is primarily associated with a wage increase of around two percent on moving from a domestic to a foreign firm, augmented by higher wage growth among foreign-owned firms. These premia appear to be specific to foreign-firm employment, as workers who return to domestically-owned firms do not appear to retain the additional earnings in their subsequent jobs. We then consider whether foreign-owned firms source workers differently from other New Zealand firms and whether there are systematic differences in the destinations of departing employees by firm ownership. Although foreign-owned firms do not appear to preferentially hire recent immigrants, employees of foreign-owned firms are more geographically mobile within New Zealand and are more likely to emigrate within a year of leaving their job.

Keywords: foreign direct investment (FDI); earnings; labour mobility (search for similar items in EconPapers)
JEL-codes: D22 F23 J31 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2014-10
New Economics Papers: this item is included in nep-bec, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: In W. Cochrane, M. P. Cameron, & O. Alimi (Eds.), Labor markets, migration, and mobility: Essays in honor of Jacques Poot, Springer Nature, 2021, 1 - 40

Downloads: (external link)
https://docs.iza.org/dp8541.pdf (application/pdf)

Related works:
Working Paper: Earnings and Employment in Foreign-owned Firms (2014)
Working Paper: Earnings and Employment in Foreign-owned Firms (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp8541

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
library@iza.org

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte (hinte@iza.org).