Martins, Pedro S. (Pedro Silva), 1974- (2004) Do foreign firms really pay higher wages? Evidence from different estimators. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. (Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)).

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Abstract

We contribute to the literature on Foreign Direct Investment and labour markets by examining wage differentials between domestic and foreign firms, drawing on a large Portuguese matched employer-employee panel. Using OLS, the foreign-firm premium is large and significantly positive but falls substantially when firm and worker controls are added. Moreover, the premium also does not vary monotonically with foreign control, increases along the wage distribution and is generally insignificant when using propensity score matching (PSM). Finally, using differences-in-differences (DID), we find lower wage growth for workers in domestic firms that are acquired by foreign investors, a result that holds when combining DID and PSM. Overall, our evidence suggests that the commonly-documented OLS premium cannot be interpreted as a causal impact.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation
Library of Congress Subject Headings (LCSH):	Investments, Foreign -- Portugal, Foreign trade and employment, Wage differentials -- Portugal, Statistical matching
Series Name:	Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)
Publisher:	University of Warwick. Centre for the Study of Globalisation and Regionalisation
Place of Publication:	Coventry
Date:	23 September 2004
Number:	No.149
Number of Pages:	41
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Fundação para a Ciência e a Tecnologia (FCT)
Grant number:	POCTI/ECO/33089/99 (FCT), SFRH/BD/934/2000 (FCT)
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URI:	http://wrap.warwick.ac.uk/id/eprint/1968

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