Do Multinationals Transfer Culture? Evidence on Female Employment in China

Abstract

We study the global diffusion of culture through multinationals, focusing on gender norms. Using data on manufacturing firms in China over 2004-2007, we find that foreign affiliates from countries with a more gender-equal culture tend to employ proportionally more women and appoint female managers. They also generate cultural spillovers, increasing domestic firms’ female labor shares in the same industry or city. Based on a multi-sector model with firm heterogeneity in productivity, gender biases, and learning, we perform counterfactual exercises. Hypothetically eliminating firms’ gender biases raises China’s aggregate total factor productivity by 5%, of which spillovers from multinationals account for 19%.

Keywords: cultural spillover, gender inequality, FDI, misallocation

JEL Classification: F110, F210, J160, L220, O470