Foreign Takeovers and Wages: Theory and Evidence from Hungary

Sándor Csengődi, Rolf Jungnickel and Dieter Urban

No 26278, Discussion Paper Series from Hamburg Institute of International Economics

Abstract: This study discriminates FDI technology spillover from learning effects. Whenever learning takes time, our model predicts that foreign investors deduct the economic value of learning from wages of inexperienced workers and add it to experienced ones to prevent them from moving to local competitors. Hence, the national wage bill is unaffected by foreign takeovers. In contrast to learning, technology spillover effects occur whenever a worker with MNE experience contributes more to local firms' than to MNEs' productivity. In this case, experienced MNE workers are hired by local firms and the host country obtains a welfare gain. We investigate empirically wages, productivity, and worker turnover during the course of foreign takeovers on employee-employer matched data of Hungary and find evidence consistent with learning, but not with FDI technology spillovers.

Keywords: International Relations/Trade; Labor and Human Capital (search for similar items in EconPapers)
Pages: 47
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Foreign Taleovers and Wages: Theory and Evidence from Hungary (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hwwadp:26278

DOI: 10.22004/ag.econ.26278

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