Foreign-owned firms and the gender wage gap: Does cultural transmission matter?

Rita Pető ()
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Rita Pető: HUN-REN Centre for Economic and Regional Studies

No 2509, KRTK-KTI WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: This paper examines how foreign direct investment (FDI) influences the gender wage gap, using matched employer-employee data from Hungary between 2003 and 2017. I find that foreign-owned firms exhibit a 4 percentage points larger within-firm gender wage gap compared to domestic firms, even after accounting for worker- and firm-level selection. This gap persists even after foreign capital withdraws, suggesting a lasting structural imprint. Furthermore, the results highlight the role of cultural norms: subsidiaries of companies from countries with more favorable economic opportunities for women show significantly smaller gender disparities. Greater wage-setting flexibility is also associated with a wider gender wage gap, especially among new hires. Overall, the study demonstrates that foreign ownership not only affects wage structures through economic channels but also transmits cultural norms that shape gender inequality in the labor market.

Keywords: gender inequality; wage inequality; foreign-owned firms (search for similar items in EconPapers)
JEL-codes: F23 J16 J31 M52 (search for similar items in EconPapers)
Date: 2025-06
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Persistent link: https://EconPapers.repec.org/RePEc:has:discpr:2509

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