Acquisitions, Multinationals, and Wage Dispersion

29 Pages Posted: 28 Jun 2007 Last revised: 27 Nov 2007

See all articles by Fredrik Heyman

Fredrik Heyman

Research Institute of Industrial Economics (IFN)

Fredrik Sjöholm

Lund University School of Economics and Management; Research Institute of Industrial Economics (IFN)

Patrik Gustavsson Tingvall

Stockholm School of Economics

Date Written: November 21, 2006

Abstract

Multinational firms pay relatively high wages. Less is known about the wage structure within multinational and non-multinational firms. We examine the impact of acquisitions on wage dispersion in Sweden using a large matched employer-employee data set including about 50 percent of the Swedish labor force and with detailed information on job-tasks and education. Foreign acquisitions of both domestic multinationals and local firms increase the wage dispersion by increasing wages for high-skilled employees. The positive impact is concentrated to CEOs and other managers, whereas other groups are either negatively affected or not affected at all. The impact on high-skilled workers' wages seems to be caused by the acquisition rather than by the ownership itself, since changes from foreign to Swedish ownership result in similar increases. Our results are in line with theories stressing ownership changes as opportunities to renegotiate contracts and perform organizational changes.

Keywords: FDI, Multinational Companies, Foreign Ownership, Wage Dispersion, Skill groups, Matched Employer-Employee data

JEL Classification: F23, J31, C23

Suggested Citation

Heyman, Fredrik and Sjöholm, Fredrik and Gustavsson Tingvall, Patrik, Acquisitions, Multinationals, and Wage Dispersion (November 21, 2006). IFN Working Paper No. 675, Available at SSRN: https://ssrn.com/abstract=993409 or http://dx.doi.org/10.2139/ssrn.993409

Fredrik Heyman (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://https://www.ifn.se/eng/people/research-faculty/fredrikh_1

Fredrik Sjöholm

Lund University School of Economics and Management ( email )

P.O Box 7080
Lund
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Patrik Gustavsson Tingvall

Stockholm School of Economics ( email )

P.O. Box 6501
Stockholm
Sweden

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