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Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers

Author

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  • Pedro S. Martins

    (Queen Mary, University of London)

  • Luiz A. Esteves

    (Universidade Federal do Paraná and Università di Siena)

Abstract

How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small.

Suggested Citation

  • Pedro S. Martins & Luiz A. Esteves, 2008. "Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers," Working Papers 0079, Universidade Federal do Paraná, Department of Economics.
    • Handle: RePEc:fup:wpaper:0079
    Note: Creation Date corresponds to the year in which the paper was published on the Department of Economics website. The paper may have been written a small number of months before its publication date.
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    References listed on IDEAS

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    Cited by:

    1. Hjort, Jonas & Li, Xuan & Sarsons, Heather, 2020. "Across-Country Wage Compression in Multinationals," CEPR Discussion Papers 14465, C.E.P.R. Discussion Papers.
    2. John P. Weche Geluebcke, 2012. "Foreign and Domestic Takeovers in Germany: First Comparative Evidence on the Post-acquisition Target Performance using new Data," Working Paper Series in Economics 249, University of Lüneburg, Institute of Economics.
    3. Pedro S. Martins, 2011. "Paying More To Hire The Best? Foreign Firms, Wages, And Worker Mobility," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 349-363, April.
    4. Maria Borga & Perla Ibarlucea Flores & Monika Sztajerowska, 2020. "Drivers of divestment decisions of multinational enterprises - A cross-country firm-level perspective," OECD Working Papers on International Investment 2019/03, OECD Publishing.
    5. Margarita Carvalho & João Cerejeira, 2019. "Mergers and Acquisitions and wage effects in the Portuguese banking sector," NIPE Working Papers 07/2019, NIPE - Universidade do Minho.
    6. Runar Brännlund & Jonas Nordström & Jesper Stage & Dick Svedin, 2016. "Foreign ownership and its effects on employment and wages: the case of Sweden," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-17, December.
    7. Jonas Hjort & Xuan Li & Heather Sarsons, 2020. "Random-Coefficients Logit Demand Estimation with Zero-Valued Market Shares," Working Papers 2020-15, Becker Friedman Institute for Research In Economics.
    8. Salamaga Marcin, 2021. "The use of Correspondence Analysis in the Study of Foreign Divestment in the Visegrad Countries during the Coronavirus Crisis," Econometrics. Advances in Applied Data Analysis, Sciendo, vol. 25(2), pages 15-26, June.
    9. John S. Earle & Almos Telegdy & Gabor Antal, 2012. "FDI and Wages: Evidence from Firm-Level and Linked Employer-Employee Data in Hungary, 1986-2008," Budapest Working Papers on the Labour Market 1209, Institute of Economics, Centre for Economic and Regional Studies.

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    More about this item

    Keywords

    foreign direct investment; ownership changes; worker mobility;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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