Foreign Ownership and Skillbiased Technological Change

Michael Koch and Marcel Smolka

No 7332, CESifo Working Paper Series from CESifo

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: 2018
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ino and nep-int
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Related works:
Journal Article: Foreign ownership and skill-biased technological change (2019)
Working Paper: Foreign Ownership and Skill-biased Technological Change (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7332

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