Unraveling the MNE wage premium

Journal of International Business Studies (2019), doi: 10.1057/s41267-019-00285-x, open access

36 Pages Posted: 10 Dec 2020

See all articles by Khadija van der Straaten

Khadija van der Straaten

affiliation not provided to SSRN

Niccolò Pisani

IMD

Ans Kolk

University of Amsterdam Business School

Date Written: October 22, 2020

Abstract

Whereas the field of International Business has extensively studied MNEs’ generic (positive) impact on host economies, but rarely on employee wages, economics research has only shown an overall MNE wage premium. We ‘unravel’ this premium, considering multiple levels of analysis and accounting for host-country contextual contingencies, to unveil MNEs different (positive or negative) distributional effects. Using unique micro-level data from over 40,000 employees in 13 countries, we examine MNEs’ distributional effects for employees’ gender, experience, and immigrant status; the influence of host-country property rights protection and labor regulation; and interplays with region and industry effects. MNEs’ distributional effects show marked differences that largely depend on the host-country context, and that are positive for experienced and foreign-born employees in developed countries but negative for females working in developing countries. Whereas in developed countries the gender wage gap is smaller in MNEs than in domestic firms as hypothesized, we find evidence of a larger wage gap in developing countries. The analysis also reveals that the higher host-countries’ level of property rights protection, the lower the MNE wage premium. Our study points at the need to reassess statements about the generic positive impact of MNEs in host countries, particularly in developing countries, and discusses (further) research implications.

Keywords: multinational corporations, multinational enterprises, domestic firms, employees, wage premia, wages, multi-level analysis, gender equality, gender

JEL Classification: D21, D22, D3, F23, F66, J15, J16, J21, J31, J58, J61, J71, J81, M12, M14, M16, M54, M55

Suggested Citation

van der Straaten, Khadija and Pisani, Niccolò and Kolk, Ans, Unraveling the MNE wage premium (October 22, 2020). Journal of International Business Studies (2019), doi: 10.1057/s41267-019-00285-x, open access, Available at SSRN: https://ssrn.com/abstract=3717151

Khadija Van der Straaten

affiliation not provided to SSRN

Niccolò Pisani

IMD ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

HOME PAGE: http://www.imd.org/faculty/professors/pisani-niccolo/

Ans Kolk (Contact Author)

University of Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4289 (Phone)
+31 20 525 5281 (Fax)

HOME PAGE: http://www.anskolk.eu

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