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Across-Country Wage Compression in Multinationals

Jonas Hjort, Xuan Li and Heather Sarsons

No 26788, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Many employers link wages at the firm’s establishments outside of the home region to the level at headquarters. Multinationals that anchor-to-the headquarters also transmit wage changes arising from shocks to minimum wages and exchange rates in the home country/state to their foreign establishments. Such multinationals fire more low-skill workers and hire fewer new workers abroad after a permanent (minimum wage-induced) foreign establishment wage increase originating in shocks to headquarter wages, but not after a temporary (exchange rate-induced) one. We show this using data on 1,060 multinationals’ establishments across the world and in employee-level data on the same employers’ establishments in Brazil.

JEL-codes: F23 J01 J3 J31 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-int and nep-lma
Note: DEV LS
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