 Do workers or firms drive the foreign acquisition wage gap?Marcus Roesch, Michiel Gerritse, Bas Karreman, Frank Oort and Bart Loog European Economic Review, 2025, vol. 178, issue C Abstract: Foreign-acquired firms pay higher wages. The wage gap may arise with worker composition (e.g., sorting of high-quality workers) or firm-level premia (e.g., productivity improvements). We propose a dynamic decomposition on The Netherlands’ universal employer–employee data to understand the drivers of the post-acquisition wage gap. The wage gap rises from 1% to 5% after the acquisition, and firm level premia account for roughly three-quarters of the gap. The contribution of the workforce composition is initially absent, but grows to one-fifth of the wage gap, driven solely by new hires. Firm-level premia associate with higher management pay, worker training, and firms’ internationalization strategies. We show how the implied relative importance of worker sorting and firm-level development varies with assumptions on the counterfactual of the acquisition. Keywords: Foreign acquisition; Wage decomposition; Matched employer–employee data; Labor mobility; Netherlands (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:178:y:2025:i:c:s0014292125001552 DOI: 10.1016/j.euroecorev.2025.105105 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
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