Random-Coefficients Logit Demand Estimation with Zero-Valued Market Shares

Jonas Hjort (), Xuan Li () and Heather Sarsons ()
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Jonas Hjort: Columbia University - Graduate School of Business
Xuan Li: Hong Kong University of Science and Technology
Heather Sarsons: University of Chicago - Booth School of Business

No 2020-15, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: Many employers link wages at the firm’s establishments outside of the home region to the level at headquarters. Multinationals that anchor-to-the headquarters also transmit wage changes arising from shocks to minimum wages and exchange rates in the home country/state to their foreign establishments. Such multinationals fire more low-skill workers and hire fewer new workers abroad after a permanent (minimum wage-induced) foreign establishment wage increase originating in shocks to headquarter wages, but not after a temporary (exchange rate-induced) one. We show this using data on 1,060 multinationals’ establishments across the world and in employee-level data on the same employers’ establishments in Brazil.

JEL-codes: F23 J01 J3 J31 (search for similar items in EconPapers)
Pages: 75 pages
Date: 2020
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