Foreign ownership and skill-biased technological change

Michael Koch and Marcel Smolka

Journal of International Economics, 2019, vol. 118, issue C, 84-104

Abstract: We conduct an empirical investigation into the effects of foreign ownership on worker skills using firm-level data from Spain. To control for endogeneity bias due to selection into foreign ownership, we combine a difference-in-differences approach with a propensity score weighting estimator. Our results provide novel evidence that foreign-acquired firms actively raise the skills of their workforce in response to the acquisition by hiring high-skilled workers and providing worker training. To pin down the mechanism, we exploit unique information on whether firms use their foreign parent in exporting to foreign markets. Our results suggest a fundamental role for market access through the foreign parent in explaining skill upgrading in foreign-acquired firms. We reveal substantial productivity gains within foreign-acquired firms and we show that these gains derive from a concurrent effort to raise worker skills and adopt more advanced technology, suggesting a skill bias in technological innovations. We develop a simple theoretical model of foreign ownership featuring technology-skill complementarities in production that can rationalize our findings.

Keywords: Multinational enterprises; Mergers and acquisitions; Skill-biased technological change; Worker training; Productivity (search for similar items in EconPapers)
JEL-codes: D22 D24 F23 G34 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Foreign Ownership and Skillbiased Technological Change (2018)
Working Paper: Foreign Ownership and Skill-biased Technological Change (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:118:y:2019:i:c:p:84-104

DOI: 10.1016/j.jinteco.2019.01.017

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