EconPapers    
Economics at your fingertips  
 

Labor Market Imperfections, Markups and Productivity in Multinationals and Exporters

Sabien Dobbelaere () and Kozo Kiyota

No 11225, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the links between the internationalization mode of firms and market imperfections in product and labor markets. We develop a framework for modelling heterogeneity across firms in terms of (i) product market power (price-cost markups), (ii) labor market imperfections (workers' bargaining power during worker-firm negotiations or firm's degree of wage-setting power) and (iii) revenue productivity. We apply this framework to analyze whether the pricing behavior of firms in product and labor markets differs across firms that engage in different forms of internationalization. Engagement in international activities is found to matter for determining not only the type of imperfections in product and labor markets but also the degree of imperfections. Clear differences in behavior between firms that serve the foreign market either through exporting or through FDI are observed. Being an exporter introduces allocative inefficiencies in product as well as labor markets as we find export status to be positively correlated with both product market power (markups) and market power consolidated on the labor supply side (workers' bargaining power). But exporting firms where search frictions are inducing wages to vary with revenue are less able to exploit wage-setting power. Firms with foreign subsidiaries, on the other hand, seem to reduce price distortions in product and labor markets. In addition, we observe heterogeneous returns to being an exporter/MNE within an industry and also discern cross-industry differences.

Keywords: rent sharing; monopsony; price-cost mark-ups; productivity; exporting; multinational firms; panel data (search for similar items in EconPapers)
JEL-codes: C23 D24 F14 F16 J50 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hme, nep-int and nep-lab
Date: 2017-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Published in: Labour Economics, 2018, 53, 198-212

Downloads: (external link)
http://ftp.iza.org/dp11225.pdf (application/pdf)

Related works:
Journal Article: Labor market imperfections, markups and productivity in multinationals and exporters (2018) Downloads
Working Paper: Labor Market Imperfections, Markups, and Productivity in Multinationals and Exporters (2018) Downloads
Working Paper: Labor market imperfections, markups and productivity in multinationals and exporters (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp11225

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2019-11-12
Handle: RePEc:iza:izadps:dp11225