Across-Country Wage Compression in Multinationals
77 Pages Posted: 2 Mar 2020 Last revised: 21 Nov 2022
Date Written: February 2020
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.
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