Across-Country Wage Compression in Multinationals

77 Pages Posted: 2 Mar 2020 Last revised: 21 Nov 2022

See all articles by Jonas Hjort

Jonas Hjort

Columbia University - Columbia Business School, Finance

Xuan Li

Hong Kong University of Science & Technology (HKUST)

Heather Sarsons

University of Chicago - Booth School of Business

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Date Written: February 2020

Abstract

Many employers link wages at establishments outside of the home region to the level at headquarters. We show this using new data on 1,213 multinationals’ establishments across the world and linked employee-level data on their establishments in Brazil. Headquarters wage changes arising from minimum wage and exchange rate shocks are partially transmitted to workers employed in the same position abroad. Wage change transmission appears to be direct and results from firm-wide wage-setting procedures rather than associated technology or employment changes. “Anchored” wage-setting is associated with particular headquarter country characteristics.

Suggested Citation

Hjort, Jonas and Li, Xuan and Sarsons, Heather, Across-Country Wage Compression in Multinationals (February 2020). NBER Working Paper No. w26788, Available at SSRN: https://ssrn.com/abstract=3547138

Jonas Hjort (Contact Author)

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Xuan Li

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Heather Sarsons

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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