Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers

Pedro Martins and Luiz Esteves

No 79, Working Papers from Universidade Federal do Paraná, Department of Economics

Abstract: How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small.

Keywords: foreign direct investment; ownership changes; worker mobility (search for similar items in EconPapers)
JEL-codes: F23 J31 J63 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2008
Note: Creation Date corresponds to the year in which the paper was published on the Department of Economics website. The paper may have been written a small number of months before its publication date.
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Citations: View citations in EconPapers (12)

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Working Paper: Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers (2008)
Working Paper: Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:fup:wpaper:0079

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