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

Holger Görg, Eric Strobl () and Frank Walsh

Open Access publications from School of Economics, University College Dublin

Abstract: While foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers, the causes of this remain unresolved. In a two-period bargaining framework we show that if training is more productive and specific in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employer-employee matched data set we verify 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: 19 pages
Date: 2007-10
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Citations: View citations in EconPapers (56)

Published in: Review of World Economics, 143(3) 2007-10

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http://hdl.handle.net/10197/8053 Open Access version, 2007 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/8053

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