Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training

Holger Görg, Eric Strobl () and Frank Walsh

No 590, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers in both developed and developing countries alike. Although a number of studies have documented and some attempted to explain this stylized fact, the issue still remains unresolved. In a multi-period bargaining framework we show that if firm specific training is more productive in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employeremployee matched data set we show that the foreign wage premium is only acquired by workers over time spent in the firm and only by those that receive on the job training, thus providing empirical support for a firm specific human capital acquisition explanation.

Keywords: on-the-job training; foreign firms; wages (search for similar items in EconPapers)
JEL-codes: F23 J24 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2002-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Published - published in: Review of World Economics, 2007, 143(3), 464-482

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Related works:
Chapter: Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training (2016)
Journal Article: Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training (2007)
Working Paper: Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training (2007)
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