Across-Country Wage Compression in Multinationals

77 Pages Posted: 25 Mar 2020

See all articles by Jonas Hjort

Jonas Hjort

Columbia Business School - Finance and Economics

Xuan Li

Hong Kong University of Science & Technology (HKUST)

Heather Sarsons

affiliation not provided to SSRN

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Date Written: March 2020

Abstract

Many employers link wages at the firm's establishments outside of the home region to the level at headquarters. Multinationals that anchor-to-the-headquarters also transmit wage changes arising from shocks to minimum wages and exchange rates in the home country/state, to their foreign establishments. Such multinationals fire more low-skill workers and hire fewer new workers abroad after a permanent (minimum wage-induced) foreign establishment wage increase originating in shocks to headquarter wages, but not after a temporary (exchange rate-induced) one. We show this using data on 1,060 multinationals' establishments across the world and in employee-level data on the same employers' establishments in Brazil

Suggested Citation

Hjort, Jonas and Li, Xuan and Sarsons, Heather, Across-Country Wage Compression in Multinationals (March 2020). CEPR Discussion Paper No. DP14465, Available at SSRN: https://ssrn.com/abstract=3560272

Jonas Hjort (Contact Author)

Columbia Business School - Finance and Economics ( 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

affiliation not provided to SSRN

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