Globalised Labour Markets? International Rent Sharing across 47 Countries

Pedro Martins and Yong Yang

No 5283, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We present evidence about the role of rent sharing in fostering the interdependence of labour markets around the world. Our results draw on a firm-level panel of more than 2,000 multinationals and more than 5,000 of their affiliates, covering 47 home and host countries. We find considerable evidence that multinationals share profits internationally, by paying higher wages to their workers in foreign affiliates in periods of higher profits. This occurs even across continents, and not only within Europe, as shown in earlier research. The results are robust to different tests, including a falsification exercise based on 'matched' parents. Finally, we show that different measures of the heterogeneity between parents and affiliates tend to increase rent sharing while the number of affiliates tends to decrease rent sharing, results we argue are consistent with bargaining views.

Keywords: profit sharing; wage determination; multinationals (search for similar items in EconPapers)
JEL-codes: J31 J41 J50 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2010-10
New Economics Papers: this item is included in nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published - published in: British Journal of Industrial Relations, 2015, 53(4), 664–691

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Journal Article: Globalized Labour Markets? International Rent Sharing Across 47 Countries (2015)
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