Paying More to Hire the Best? Foreign Firms, Wages, and Worker Mobility

Abstract:     
In the context of the debate on the labor-market consequences of globalization, we adopt an original approach toward the identification of the wage differences between foreign and domestic firms: worker mobility. Using matched employer-employee panel data for Portugal, we consider virtually all spells of interfirm mobility over a period of 10 yr. We find that foreign firms offer significantly more generous wage policies, although there is also a (smaller) selection effect. The results are robust to the consideration of displaced workers, wage growth differences in the new firms, and different subsets of workers.

Number of Pages in PDF File: 15

JEL Classification: J31, J63, F23

Accepted Paper Series