Foreign Ownership Wage Premia in Emerging Economies

25 Pages Posted: 16 Mar 2011

See all articles by Tor Eriksson

Tor Eriksson

Aarhus University - Department of Economics and Business Economics

Mariola Pytliková

VSB - Technical University of Ostrava - Faculty of Economics; Central European Labour Studies Institute (CELSI); University College London - CReAM - Centre for Research and Analysis of Migration; IZA Institute of Labor Economics; Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences

Date Written: March 15, 2011

Abstract

In this article we examine the relationship between wages, labour productivity and ownership using a linked employer-employee dataset covering a large fraction of the Czech labour market in 2006. We distinguish between different origins of ownership and study wage and productivity differences. The raw wage differential between foreign and domestically-owned firms is about 23 percent. The empirical analysis is carried out on both firm- and individual-level data. A key finding is that industry, region and notably human capital explain only a small part of the foreign-domestic ownership wage differential. Both white and blue collar workers as well as skilled and unskilled employees obtain a foreign ownership wage premium. Foreign ownership premia are more prevalent in older and less technologically advanced firms. Joint estimation of productivity and wage equations show that, controlling for human capital, the difference in productivity is about twice as large as the wage differential. Overall, results indicate that the international firms share their rents with their employees.

Keywords: Foreign ownership, wages, productivity

JEL Classification: J31, D21

Suggested Citation

Eriksson, Tor and Pytliková, Mariola and Pytliková, Mariola, Foreign Ownership Wage Premia in Emerging Economies (March 15, 2011). Economics of Transition, Vol. 19, No. 2, pp. 371-395, 2011, Available at SSRN: https://ssrn.com/abstract=1787870 or http://dx.doi.org/10.1111/j.1468-0351.2011.00411.x

Tor Eriksson (Contact Author)

Aarhus University - Department of Economics and Business Economics ( email )

Fuglesangs Allé 4
Aarhus, 8210
Denmark
45 87164978 (Phone)

Mariola Pytliková

VSB - Technical University of Ostrava - Faculty of Economics ( email )

Sokolska 33
Ostrava 1, 701 21
Czech Republic

Central European Labour Studies Institute (CELSI) ( email )

Zvolenská 29
Bratislava, 82109
Slovakia

University College London - CReAM - Centre for Research and Analysis of Migration ( email )

Drayton House
30 Gordon Street
London, WC1H 0AX
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences ( email )

Politickych veznu 7
Prague, 111 21
Czech Republic

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