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Global firms and wages: is there a rent sharing channel?

Author

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  • Jože P. Damijan

    (Faculty of Business and Economics, University of Ljubljana)

  • Luca Marcolin

    (Faculty of Economics and Business, KU Leuven)

Abstract

In this paper we explore the extent to which firms engaged in international trade and FDI activities share profits. We allow for differences not only between domestic and foreign owned firms, but also between firms with outward FDI, importers and exporters. We argue that firms engaged in international trade enhance their performance through knowledge spillovers and technology upgrading – similar to what happens to companies that are part of multinational groups – and that this superior performance can translate into substantial wage premia to workers. Using a unique dataset for Slovenian firms for the period 1994-2002, we confirm positive profit-sharing for foreign firms, firms that engage in outward FDI and two-way traders, but not for firms that only import or export.

Suggested Citation

  • Jože P. Damijan & Luca Marcolin, 2013. "Global firms and wages: is there a rent sharing channel?," Working Papers 164, European Bank for Reconstruction and Development, Office of the Chief Economist.
    • Handle: RePEc:ebd:wpaper:164
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    References listed on IDEAS

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    Cited by:

    1. TANAKA Ayumu, 2015. "Wage Premiums for Exporters and Multinational Enterprises: Evidence from Japanese linked employer-employee data," Discussion papers 15106, Research Institute of Economy, Trade and Industry (RIETI).
    2. Ayumu Tanaka, 2018. "Why Do Exporters and Multinational Firms Pay Higher Wages?:Evidence from Japanese Linked Employer–Employee Data," Discussion papers e-17-013, Graduate School of Economics , Kyoto University.

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    More about this item

    Keywords

    firm heterogeneity; multinational firms; wage determination; profit-sharing;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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