Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training

Holger Görg (), Eric Albert Strobl () and Frank Walsh

No 6171, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: While foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers, the causes of this remain unresolved. In a two-period bargaining framework we show that if training is more productive and specific in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employer-employee matched data set we verify that the foreign wage premium is only acquired by workers over time spent in the firm and only by those that receive on the job training, thus providing empirical support for a firm specific human capital acquisition explanation.

Keywords: foreign firms; on-the-job training; wages (search for similar items in EconPapers)
JEL-codes: F23 J24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-lab
Date: 2007-03
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Working Paper: Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training (2002)
Journal Article: Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training (2007)
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