The Takeover and Selection Effects of Foreign Ownership in Germany: An Analysis Using Linked Worker-Firm Data

GEP Research Paper No. 07/08

33 Pages Posted: 9 Feb 2007

See all articles by Martyn J. Andrews

Martyn J. Andrews

University of Manchester - School of Social Sciences

Lutz Bellmann

Institute for Employment Research (IAB); Institute for the Study of Labor (IZA)

Thorsten Schank

University of Erlangen-Nuremberg

Richard Upward

University of Nottingham - School of Economics

Date Written: 2007

Abstract

We use a linked employer-employee data set from Germany to estimate the wage effect of foreign-affiliates in (the former) East and West Germany. In addition, the wage effects of the large number of West German affiliates which are located in East Germany are also considered. The implemented techniques allow us to control both for worker- and plant-level unobserved components of earnings. We find large selection effects both in terms of worker- and firm unobserved components of wages. The selection effect is larger for East German plants. Once the selection effect is taken into account, the genuine takeover effect is small and in some cases insignificantly different from zero. In contrast to the selection effect, the takeover effect is slightly larger in West Germany, where it amounts to 2.7%.

Keywords: Foreign ownership, wages, linked employer-employee data

JEL Classification: F23, J31, C21

Suggested Citation

Andrews, Martyn J. and Bellmann, Lutz and Schank, Thorsten and Upward, Richard, The Takeover and Selection Effects of Foreign Ownership in Germany: An Analysis Using Linked Worker-Firm Data (2007). GEP Research Paper No. 07/08, Available at SSRN: https://ssrn.com/abstract=962335 or http://dx.doi.org/10.2139/ssrn.962335

Martyn J. Andrews (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom
0161 275-4874 (Phone)

Lutz Bellmann

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany
+49 911 179 3046 (Phone)
+49 911 179 3297 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Thorsten Schank

University of Erlangen-Nuremberg ( email )

Schloßplatz 4
Erlangen, DE Bavaria 91054
Germany

Richard Upward

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 5151 (Phone)
+44 115 951 4159 (Fax)

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