MNEs and wages: The role of productivity spillovers and imperfect labor markets

Bahar Sağlam and Selin Sayek

Economic Modelling, 2011, vol. 28, issue 6, 2736-2742

Abstract: Disentangling the labor market implications of increased foreign capital flows remains important. This paper provides a unifying framework allowing to study the wage implications of multinational enterprise (MNE) activities, pointing to the importance of controlling for both labor market imperfections and productivity spillovers from foreign to local firms. Results show that increased MNE activities increase average wages in the local economy while contributing to a larger wage dispersion between the MNE and local firms. While the results pertaining to average wages depends heavily on the frictions in the labor market, how much the wage dispersion alters also depends on the extent of productivity spillovers from the MNEs to the local firms and the complementarity between domestic and foreign capital.

Keywords: FDI spillovers; Wage spillovers; Imperfect labor markets; Firm wage premium; Wage dispersion (search for similar items in EconPapers)
JEL-codes: F16 F23 J31 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: MNEs and Wages: the Role of Productivity Spillovers and Imperfect Labor Market (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:6:p:2736-2742

DOI: 10.1016/j.econmod.2011.06.029

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