Paying more to hire the best? Foreign firms, wages, and worker mobility.
As globalization globalization
Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation evolves, there is greater interest in its labor-market implications. One dimension of this question concerns the role of foreign firms in terms of their remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. of host-economy workers. While earlier cross-sectional evidence suggests that foreign firms offer more generous pay levels than their domestic counterparts (Aitken et al. 1996; Feenstra and Hanson 1997), some of these results have been questioned in recent research based on longitudinal lon·gi·tu·di·nal
Running in the direction of the long axis of the body or any of its parts. worker-level data (Martins 2004; Heyman et al. 2007; Andrews Noun 1. Andrews - United States naturalist who contributed to paleontology and geology (1884-1960)
Roy Chapman Andrews et al. 2007). Moreover, firm-level studies based on foreign acquisitions of domestic firms find mixed results. (1)
The main problem in research about the foreign-ownership wage differential wage differential n → diferencia salarial
wage differential n → éventail m des salaires
wage differential wage n concerns unobserved heterogeneity het·er·o·ge·ne·i·ty
The quality or state of being heterogeneous.
the state of being heterogeneous. across workers employed in either domestic or foreign firms. If firm affiliation is correlated cor·re·late
v. cor·re·lat·ed, cor·re·lat·ing, cor·re·lates
1. To put or bring into causal, complementary, parallel, or reciprocal relation.
2. with other factors that may affect wages but that are not controlled for, then estimates will be biased. While some research that aims to tackle this issue considers the case of acquisitions (when the same workers can be observed under the two types of firms), here we approach the unobserved heterogeneity challenge from an original perspective--worker mobility.
Specifically, we draw upon a longitudinal census of the Portuguese labor market labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience in order to consider virtually all spells of interfirm worker mobility over a long period of time (1991-2000). Such mobility spells allow us to observe the same workers when employed by domestic and foreign firms, in order to disentangle the wage policy of the firm from the heterogeneity of the workforce. We also consider "selection" effects, namely the unexplained unexplained
strange or unclear because the reason for it is not known
Adj. 1. unexplained - not explained; "accomplished by some unexplained process" differences in the wages of workers who are to experience a movement to a different firm, before such movement occurs. These unexplained wage differences are likely to capture additional skills not measured in the data but that are observable by those workers' current employers such as ability, motivation, etc.
On the other hand, the "wage policy" effect, which is more directly related to the goal of this paper, concerns differences in remuneration experienced by workers who engage in interfirm mobility, as they move between firms. Such differences in remuneration practices across firms are predicted by noncompetitive models of the labor market, namely efficiency wages In labor economics, the efficiency wage hypothesis argues that wages, at least in some markets, are determined by more than simply supply and demand. Specifically, it points to the incentive for managers to pay their employees more than the market-clearing wage in order to increase and search models. Moreover, the scope for such "wage policy" differences is also supported by abundant empirical evidence, including that of rent sharing, discrimination, cohort cohort /co·hort/ (ko´hort)
1. in epidemiology, a group of individuals sharing a common characteristic and observed over time in the group.
2. effects, and other evidence of firm heterogeneity in general (Abowd et al. 1999; Bartelsman and Doms 2000).
As far as we know, our paper is the first to conduct a systematic analysis of interfirm worker mobility drawing on census data. These population data are particularly important for our purpose as the analysis of even large samples would dramatically diminish one's ability to follow workers over time. Furthermore, we are the first to conduct such an extensive analysis in the context of the foreign-ownership wage differential literature. (2) Finally, our results may also be useful in terms of reconciling some contrasting evidence for different countries; and in terms of shedding light on the role of worker mobility as a channel of productivity spillovers from foreign to domestic firms (Fosfuri et al. 2001 ; Javorcik 2004).
Unlike earlier research based on foreign acquisitions, our paper finds very strong evidence of a sizeable, positive "wage policy" effect for foreign firms. However, "selection" effects are also present, but at a much smaller scale. These results are robust to a number of checks, including the consideration of the case of displaced displaced
see displacement. workers and an analysis of the wage growth patterns of movers when in hiring firms.
The structure of the paper is as follows: Section II describes the data; Sections III and IV present the results and the robustness analysis; finally, Section V concludes.
This paper draws on a particularly rich annual census of all firms in Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the that employ at least one worker in any year--Quadros de Pessoal (Personnel Records). This census is administered by the Ministry of Employment, which requests information about a large set of variables concerning the firm, its establishments (if any) and also about each one of all the firms' employees. (3)
Crucially for the purpose of this paper, the list of variables available in the data includes unique identifiers for both firms and employees. These variables allow us to follow workers over time and, in particular, as they move between (foreign and domestic) firms. The set of variables at the firm level includes industry (five digits), region (three digits), size (number of workers), age, foreign-ownership percentage, sales, and equity. Moreover, at the worker level, the variables include education, age, gender, tenure (in months), occupation (five digits), wages, hours, job level (two digits), and promotions.
There are a total of five wage variables (base pay, overtime pay, tenure-related pay, bonus, and a residual category) and two hours variables (normal time and overtime). The hourly wage measure we use throughout in this paper is defined as the sum of all five wage variables above divided by the sum of the two hour variables. This hourly wage is then deflated de·flate
v. de·flat·ed, de·flat·ing, de·flates
a. To release contained air or gas from.
b. To collapse by releasing contained air or gas.
2. using the Consumer Price Index.
We then use the foreign-ownership variable to characterize firms as either foreign or domestic owned. Specifically, we define a firm to be foreign owned when foreign investors control at least 50% of its voting rights Voting rights
The right to vote on matters that are put to a vote of security holders. For example the right to vote for directors.
The type of voting and the amount of control held by the owners of a class of stock. . (4) Moreover, while we do not have information about domestic multinationals, we know that their number was particularly small over this period (less than 100). (5)
While the census has been ongoing since 1982, in this paper we use data from 1991 to 2000. (6) This is also a period in which foreign direct investment (FDI FDI
See: Foreign direct investment ) into the Portuguese economy grew considerably, which may be explained, at least in part, by the accession Coming into possession of a right or office; increase; augmentation; addition.
The right to all that one's own property produces, whether that property be movable or immovable; and the right to that which is united to it by accession, either naturally or artificially. to the European Community in 1986--see Figure 1 for the evolution of FDI inflows and outflows from Portugal from 1985.
[FIGURE 1 OMITTED]
We constructed our main mobility data sets by matching each annual file of all employees (and their firms) from 1992 to 2000 with the equivalent file for the previous year (Each year corresponds to a snapshot (1) A saved copy of memory including the contents of all memory bytes, hardware registers and status indicators. It is periodically taken in order to restore the system in the event of failure.
(2) A saved copy of a file before it is updated. of the firms and their workers in the census month: March, up to 1993, and October October: see month. , from 1994). Workers are matched over each pair of years based on their personal identification number (and also using their gender and year and month of birth variables as further checks). Moreover, by comparing the firm identifier of each worker over the two subsequent years, the worker can be classified as either a "stayer stayer
a horse that can gallop at racing speed for at least 1.5 miles (2.4 km). " or as a "mover mover /mov·er/ (moo´ver) that which produces motion.
prime mover a muscle that acts directly to bring about a desired movement. ." (7)Spurious spu·ri·ous
Similar in appearance or symptoms but unrelated in morphology or pathology; false.
simulated; not genuine; false. movers--when the worker's firm identifier is different between t and t + 1 but the date of entry into the firm does not change in a consistent way (most likely because of mergers or movements across firms that belong to the same holding)--are dropped.
Moreover, as we acknowledge that many movers between firms will not necessarily be present in the data immediately in the following year's census month, we also consider movers between years t and t + 2. However, this case of course only applies when the individual's identifier is not present in the data in year t + 1. In this case, the date of entry into the firm in year t + 2 is required to be consistent with some spell outside the Quadros de Pessoal data during year t + 1, which implies that the individual was unemployed, inactive in·ac·tive
1. Not active or tending to be active.
a. Not functioning or operating; out of use: inactive machinery.
b. , or worked outside the coverage of the data (informal sector or public servants) in, at least, some period during year t + 1 (including that year's census month).
Finally, we also consider all other workers who can be defined as "stayers." These are workers present in years t and t + 1 at the same firm. However, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. our classification, a "stayer" between years t and t + 1 can then, of course, become a "mover" between years t + 1 and t + 2, for instance. The only "stayers" whom we disregard are those employed in firms involved in acquisitions over the years in which the acquisition takes place. A subset A group of commands or functions that do not include all the capabilities of the original specification. Software or hardware components designed for the subset will also work with the original. of these workers involved in acquisitions are examined in the work of Martins (2004).
Table 1 presents averages and standard deviations of the resulting data set, which corresponds to a total of more than 10 million observations. A total of 7.4% of all observations are movers from domestic to another domestic firm. Movers from foreign to domestic firms are 0.5% of the total while 0.6% move in the opposite direction. Only 0.1% move between different foreign firms. The remaining 91.4% of the data are "stayers." (8)
In addition, in Tables 2 and 3, we present statistics for each subsample sub·sam·ple
A sample drawn from a larger sample.
tr.v. sub·sam·pled, sub·sam·pling, sub·sam·ples
To take a subsample from (a larger sample). of movers, according to their specific path. In particular, we separately describe the workers who move from foreign to domestic firms (about 55,000 workers), from domestic to foreign firms (about 67,000 workers), between domestic firms (over 800,000 workers), and between foreign firms (about 14,000 workers). Perhaps the most remarkable difference amongst the four groups of movers concerns their wage growth. They range from 22% in the case of movers from domestic to foreign firms to -6.3% in the case of movers from foreign to domestic firms. In the case of movers between domestic firms or movers between foreign firms, the average wage growth levels are similar: 6.4% and 5.8%, respectively.
This descriptive evidence suggests strongly that foreign firms do offer more generous wage policies. However, this difference may be explained by a large number of potential differences across the four groups of movers. The following sections will therefore examine this preliminary result in considerable detail.
A. Wage Levels
Following the earlier discussion, the main equation we consider in our empirical analysis is:
[w.sub.it] = [[beta].sub.1]D[F.sub.it] + [[beta].sub.2]D[F.sub.it] [[beta].sub.3]D[D.sub.it] + [[beta].sub.4]F [F.sub.it] + [X'.sub.it][[beta].sub.5] [F'.sub.it][[beta].sub.6] + [[gamma].sub.t] + [[epsilon].sub.it],
where [w.sub.it] represents the logarithm logarithm (lŏg`ərĭthəm) [Gr.,=relation number], number associated with a positive number, being the power to which a third number, called the base, must be raised in order to obtain the given positive number. of the real wage of worker i in year t, X are worker controls (schooling, quadratics quad·rat·ics
n. (used with a sing. verb)
The branch of algebra that deals with quadratic equations.
quadratics in tenure and experience, and gender), F are firm controls concerning the characteristics of the firm that employs worker i in year t (log firm size--measured by the number of workers, two-digit industry and region dummies, and a foreign-firm dummy Sham; make-believe; pretended; imitation. Person who serves in place of another, or who serves until the proper person is named or available to take his place (e.g., dummy corporate directors; dummy owners of real estate). ), and [[gamma].sub.t] are year fixed effects. D [F.sub.it] is a dummy variable This article is not about "dummy variables" as that term is usually understood in mathematics. See free variables and bound variables.
In regression analysis, a dummy variable taking value 1 if a worker is employed by a domestic firm in year t (and in year t's job spell) (9) and will in the following job spell be employed by a foreign firm. Similarly, [FD.sub.it] is a dummy variable taking value 1 if a worker is employed by a foreign firm in year t (and in year t's job spell) and will in the following job spell be employed by a domestic firm. More formally,
(2) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE re·pro·duce
v. re·pro·duced, re·pro·duc·ing, re·pro·duc·es
1. To produce a counterpart, image, or copy of.
2. Biology To generate (offspring) by sexual or asexual means. IN ASCII ASCII or American Standard Code for Information Interchange, a set of codes used to represent letters, numbers, a few symbols, and control characters. Originally designed for teletype operations, it has found wide application in computers. ],
where s denotes the spell of employment of the individual. (10) Similarly, we have the following definitions for the remaining dummy variables:
(3) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII],
(4) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII],
(5) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII].
Given the motivation of this paper, [[beta].sub.1] and [[beta].sub.2] are the main parameters of interest. Their coefficients indicate the average difference in wages for workers who subsequently move from foreign to domestic firms or from domestic to foreign firms, respectively, in comparison to workers who stay in the same firm. Moreover, [[beta].sub.3] and 134 indicate the average difference in wages for workers who move from a domestic firm to another domestic firm or from a foreign firm to another foreign firm, respectively, before they move.
The first column of Table 4 presents the results for the estimation estimation
In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of Equation (1). We find that foreign firms pay on average about 13.6% more, a result consistent with those from other countries when using similar specifications. More importantly, we find that workers in domestic firms who will have a subsequent spell at a foreign firm are already paid (2.3%) more before they move. There is also evidence that workers in foreign firms whose subsequent employment spell is at another foreign firm are already paid substantially more (about 7.1% more) than similar workers in foreign firms but that will stay on in their current firm. On the other hand, workers who are employed in foreign firms, but employed at domestic firms in subsequent years, do not earn a significantly different wage than those who stay in their current firm. Finally, workers who move from a domestic firm to another domestic firm are on average less well paid (-0.9%) before they move.
As mentioned earlier, we also consider different versions of Equation 1. First, we allow for firm unobserved heterogeneity by including firm fixed effects ([[eta].sub.j]) in that equation:
(6) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII].
This model allows for systematic differences across different categories of movers in terms of the wage policies of their firms. For instance, movers from domestic to foreign firms may tend to be employed in low-wage domestic firms. In that case, the domestic-to-foreign dummy variable coefficient coefficient /co·ef·fi·cient/ (ko?ah-fish´int)
1. an expression of the change or effect produced by variation in certain factors, or of the ratio between two different quantities.
2. may be spuriously spu·ri·ous
1. Lacking authenticity or validity in essence or origin; not genuine; false.
2. Of illegitimate birth.
3. Botany Similar in appearance but unlike in structure or function. high if no controls for firm-specific heterogeneity are included.
Moreover, specification (6) is also attractive as it can be interpreted as presenting within-firm evidence about the differences of each type of mover with respect to their colleagues at the same firm. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , we can compare the wages of each type of "mover-to-be" (domestic to domestic or domestic to foreign, for instance) with the wages of their colleagues who will stay at the same firms. For the benefit of robustness, we also consider extended versions of the model in Equation (6) by considering firm-year dummies ([[eta].sub.j] * [[gamma].sub.t]), instead of including separately firm and year dummies ([[eta].sub.j] + [[gamma].sub.t).
Our results, presented in columns B and C of Table 4 are consistent with the findings without controls for firm unobserved heterogeneity reported in column A. We find that workers who will move to foreign firms (regardless of being employed in domestic or foreign firms) are already receiving significantly higher wages even before they move, even when compared with their colleagues in the same firm or in the same firm-year. Movers from domestic to foreign firms earn about 0.8% more than stayers, while movers from foreign to other foreign firms earn about 1.7% to 2.2% more. On the other hand, movers from foreign to domestic firms again do not earn statistically different wages than their colleagues at foreign firms.
Finally, we examine longitudinal variation in each worker's wage, by including worker-specific fixed effects ([[alpha].sub.i]) and allowing for worker time-invariant unobserved heterogeneity:
(7) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII].
This specification provides evidence about possible differences in the path of wages for workers who change their firm, as we allow for individual-specific heterogeneity. It is important to underline underline
an animal's ventral profile; the shape of the belly when viewed from the side, e.g. pendulous, pot-belly, tucked up, gaunt. that the mobility dummies ([DF.sub.it], [FD.sub.it], etc.) refer to the employment spell that predates the movement between firms. This implies that the interpretation of the results is symmetrical symmetrical
equally on both sides.
symmetrical multifocal encephalopathy
inherited disease in two forms: Limousin form appears at about a month old with blindness, forelimb hypermetria, hyperesthesia, nystagmus, aggression, weight to the more common case of dummy variables that are switched on after some occurrence. In other words, in our specification, a negative coefficient for a type of worker who moves, for instance, from a foreign to a domestic firm corresponds to an increase in wages as the worker is employed by the domestic firm.
Moreover, for the benefit of robustness, we consider first a version of Equation (7) without firm controls ([F.sub.it])--see column D. Such specification has the advantage of not partialling out any differences in wages that may result from workers moving, say, from "high-wage" to "low-wage" firms. If such differences in firm attributes are driven by compensating differentials, then it will be appropriate to control for their role in wages. However, if those differences are instead created by noncompetitive forces (e.g., rent sharing), then one should not control for them. (11) By presenting the results from both approaches (first without and then with firm-level control variables), we instead obtain what can be argued to be lower and upper bounds of the wage effects of different types of mobility between firms.
The last two columns of Table 4 indicate that all mover dummy estimates are negative. However, one should also take into account that movers between foreign and domestic firms will also gain or lose the wage premium associated to foreign ownership. This means that while domestic-to-foreign movers gain a total average wage increase of approximately 18% (9.5% + 8.5%)--see column D--movers in the opposite direction have an average wage change of -8.4% (0.08%-8.5%). On the other hand, movers from one domestic firm to another or from one foreign firm to another gain respectively 4.8% and 4.1% as they switch firms of the same ownership type. Furthermore, we find that some results are indeed attenuated Attenuated
Alive but weakened; an attenuated microorganism can no longer produce disease.
Mentioned in: Tuberculin Skin Test
having undergone a process of attenuation. when controlling for firm characteristics, but not to a very large extent. In this specification (see column E), movers from foreign to domestic firms take a pay cut of 3.2% (1.1%-4.3%), while movers from domestic to foreign firms gain a pay increase of 10.2% (5.9% + 4.3%). Movers between domestic (foreign) firms gain a wage increase of 3.1% (3.4%).
According to the earlier discussion, these findings are important evidence of more generous wage policies offered by foreign firms. On average, workers who move from a domestic to a foreign firm are more qualified (in terms of their wage residuals) than those who do not move at all from their domestic firms--a result that supports the existence of a "selection effect." However, when such workers switch to a foreign firm, they receive a very considerable pay increase. This finding supports the case that, on top of the selection effect, there is also a "wage policy effect." The latter result also suggests that a large number of such workers move voluntarily.
On the other hand, the wages of movers from foreign to domestic firms present very different characteristics. First, they tend to be (marginally) less well paid in the foreign firms from which they leave, either in a standard cross-section analysis or when comparing those movers-to-be with their colleagues who do not move. Second, movers from foreign to domestic firms take a considerable wage cut upon mobility. The contrast in the results for domestic-to-foreign and foreign-to-domestic movers give further support to the view that foreign firms offer more generous wage policies.
B. Wage Growth
One concern about the results presented earlier is that they may mask a trade-off between wage levels and wage growth. For instance, workers may accept lower starting wages (as they seem to do when moving from foreign to domestic firms) in exchange of steeper wage profiles at their new firms (Pakes and Nitzan Nitzan (Hebrew ניצן, literally flower bud) is a religiously observant town located among the Nitzanim sand dunes north of Ashkelon, Israel. Nitzan was founded in 1949, and as of 1995, it had a population of 105. , 1983). It is therefore important to investigate more deeply what happens after workers start their new jobs.
We conduct this analysis by estimating wage growth equations that allow for different wage growth levels depending on the type of between-firm mobility. We essentially adopt the wage equations described earlier (particularly the specifications presented in columns A and B of Table 4) but considering wage growth instead as the dependent variable:
(8) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII],
where [DELTA] [w.sub.it+1] = [w.sub.it+i] - [w.sub.it] is the wage growth of worker i between years t + 1 and t.
As discussed earlier, we also consider models with firm fixed effects ([[eta].sub.j]), in order to allow for firm-specific wage growth patterns:
(9) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII].
Moreover, we also compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. wage growth over different periods: between the second year in which the worker is in the "new" firm (domestic or foreign, depending on the specific mobility path) and the first year at that firm, between the third and the second year, and between the fourth and the third year (t + 2, t + 3 or t + 4). The comparison group for each analysis corresponds to a 25% sample of all workers who have also stayed on in their firms for at least 2, 3, or 4 yr (the same as the main group), but who have not moved between firms over the period.
Our results, presented in Table 5, systematically indicate higher wage growth for workers who move from domestic to foreign firms than for workers who move from foreign to domestic firms. For instance, in column A, we find that the former experience average wage growth of 4.6%, while for the latter average wage growth is only 2.5%. Very similar results are obtained for the specification with firm fixed effects and for wage growth comparisons over the third or fourth years, although the gaps in wage growth tend to fall with time. (12)
It is also interesting to notice that the inclusion of firm fixed effects in these wage growth equations dramatically increases the fit of the model, suggesting that there are very clear differences across firms not only in wage levels, as seen before, but also in wage profiles. However, the coefficients of the mobility dummies hardly change when such fixed effects are introduced.
In conclusion, we find that the differences between the two main types of movers obtained from the initial analysis in Section III(A) are actually strengthened, not weakened, when we consider wage growth patterns. Movers from domestic to foreign firms benefit not only from higher wage increases upon switching firms but also sustained higher wage growth levels after that, at least over the second and third years at their new firms.
C. Displacement displacement, in psychology: see defense mechanism.
Same as offset. See base/displacement.
As mentioned earlier, this paper seeks to provide evidence about the impact of different types of mobility. This goal may not be rigorously achieved with observational data as ours, even when considering our extensive set of control variables. Intuitively, the wages earned by workers who do not move between firms may not provide an appropriate counterfactual for the wages of workers who move (if they had not moved). So, for instance, while we find that workers who move from domestic to foreign firms experience a very large wage increase with respect to workers who do not move, the former group of workers would perhaps also have experienced a similarly large wage increase if they had stayed at their original domestic firm. In this case, the effect of the domestic-to-foreign mobility type would be overestimated.
In order to provide complementary evidence that may be less affected by the endogeneity The introduction to this article provides insufficient context for those unfamiliar with the subject matter.
Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. of interfirm mobility, we conduct an analysis based on displaced workers (Jacobson Jacobson is a surname with several variants. Some people with this name include:
1993). The displaced workers we consider are derived from two groups. The first group of workers are those who leave firms that undergo mass layoffs but still stay in business. "Mass layoffs" are defined as a net job creation rate of -40% or less, provided the firm employs that year at least 20 workers. The second group of displaced workers are those who are employed in firms that go bankrupt BANKRUPT. A person who has done, or suffered some act to be done, which is by law declared an act of bankruptcy; in such case he may be declared a bankrupt.
2. It is proper to notice that there is much difference between a bankrupt and an insolvent. , defined here as firms whose identifiers do not appear again in the data. (13) Given the motivation of our analysis, all displaced workers are required to be observed again in the data in year t + 1 or t + 2.
We also consider a sample of 25% of all workers who have never switched firms (our "control" group). All movers between firms that have moved outside of the context of a displacement (as defined above) are dropped from our sample. Table 6 presents some descriptive statistics descriptive statistics
see statistics. of the sample of displaced workers. These correspond to approximately 183,000 observations or about 18.6% of all movers. Amongst other results, we find a large percentage of industry switchers (46.3%), which is, however, smaller than in the set of all movers. It is also interesting to notice that there is a greater share of domestic-to-foreign movers in the displaced sample than in the set of all movers.
We find that our earlier results based on all workers hold in the displaced movers subsampie--see Table 7. For instance, across specifications A, B, and C, we find that displaced movers from domestic to foreign firms are systematically better paid (at the domestic firms) compared with workers who do not move to foreign firms (a significant premium ranging from 1.7% to 4.9%). However, displaced workers who move from foreign to domestic firms earn lower wages than their colleagues at the foreign firms. In this case, we find a negative and significant premium ranging from -3.8% to -7.6%, except when not considering firm heterogeneity, when the premium is insignificant.
Recall that all such foreign-to-domestic coefficients were significant when considering the entire sample (Table 4).
Moreover, displaced movers from foreign to domestic firms also undergo considerable pay cuts, from -7.7% (-2.1% -5.6%) to -5.6% (-2.6% -3%). On the other hand, displaced movers from domestic to foreign firms do still enjoy a considerable increase in their pay, from 14.5% (8.9% + 5.6%) to 5.8% (2.8% + 3%).
Overall, these findings reinforce the earlier results on different patterns of wages across different types of movers. Workers who move from foreign to domestic firms are paid less (or, at least, not more) than their colleagues before they move (the "selection effect"). On top of that, these workers subsequently take pay cuts when they move (the "wage policy effect"). On the other hand, workers who move from domestic to foreign firms are already paid more than their colleagues. These displaced movers from domestic to foreign firms then go on to earn considerable pay increases at their new firms.
In this section, we consider the robustness of our results to different subsamples of our data set. We start by considering the specific case of "high-skill" industries. Our motivation is twofold: First, "high-skill" industries are more prevalent in developed countries. The analysis of such industries may therefore shed light on the international differences regarding the evidence on the foreign-firm wage differential as mentioned earlier (Heyman et al. 2007; Andrews et al. 2007; Martins and Esteves 2008).
A second aspect, although related to the first, is that one may argue that there is less scope for large wage discrepancies between domestic and foreign firms in "high-skill" industries than in "low-skill" industries. In fact, the latter type of industries may allow for greater scope in terms of wage dispersion Wage dispersion is an economic term which refers to the amount of variation in wages encountered in an economy. Wage dispersion in the US and Europe
European countries have in general much less wage dispersion than the U.S. does. between firms and, in particular, between domestic and foreign firms, given the low wages typically paid there, especially when compared to the wages for similar jobs in the home country of the foreign firms.
Finally, we examine wage differences for the entire data set but adopting the point of view of differences and changes in wages after the spell of mobility, again for different types of mobility. This allows us to assess the wage increases upon mobility when controlling for the characteristics of the hiring firm (in our benchmark results we controlled instead for the characteristics of the firm the worker was leaving). Moreover, this approach also allows us to investigate the "ranking" of the new workers in terms of their colleagues at the hiring firms.
A. High-Skill Industries
We analyze high-skill industries by selecting only industries which exhibit particularly high levels of worker schooling. In particular, we construct our sample by considering the average schooling of all workers in each firm and in each year. We then calculate the mean of that average schooling per firm-year across all firms in each industry over the 10 yr in our sample. Finally, we select only firms in industries whose average schooling is in the top third of the distribution of schooling across all firms.
The results are presented in Table 8. Again, the findings are consistent with the earlier analysis, namely that there is a negative "selection effect" regarding the workers in foreign firms that are hired by domestic firms, although the finding is reverted re·vert
intr.v. re·vert·ed, re·vert·ing, re·verts
1. To return to a former condition, practice, subject, or belief.
2. Law To return to the former owner or to the former owner's heirs. in the analysis within each firm. Moreover, while such movers do still take pay cuts at domestic firms, it is noticeable that the magnitude of these pay cuts is considerably smaller than in previous analysis. On the other hand, we still find the same pattern as to the wage level and wage growth differences for workers who move from domestic to foreign firms. (14)
Overall, these findings lend further strength to the main results from Section III, especially in terms of the positive "selection" and "wage policy" effects concerning movers from domestic to foreign firms. However, the evidence concerning movers from foreign to domestic firms for some definitions of "high-skill" industries presents some differences, as the wage cuts for those workers tend to be smaller and there is some evidence of positive selection.
As mentioned earlier, this difference between the main results and those regarding "high-skill" industries may help one reconcile the contrasting results about the role of foreign firms in developed and developing economies in research using worker-level longitudinal data (Heyman et al. 2007; Andrews et al. 2007; Martins and Esteves 2008). The first two papers, covering the case of Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. and Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , respectively, find little evidence of wage differences between foreign and domestic firms, unlike in the case of the third paper, which considers the case of Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. . To the extent that, in developing economies, foreign firms are more likely to be located in "low-skills" industries, then the scope for foreign firms to pay higher wages is greater. Our results, comparing different sectors of the same economy, are consistent with that hypothesis.
B. "After-Mobility" Analysis
In our final robustness analysis, we reexamine re·ex·am·ine also re-ex·am·ine
tr.v. re·ex·am·ined, re·ex·am·in·ing, re·ex·am·ines
1. To examine again or anew; review.
2. Law To question (a witness) again after cross-examination. our earlier, benchmark results from the point of view of the firm to which a worker moves to, rather than from the point of view of the firm from which a worker leaves. This complementary perspective on the wage consequences of interfirm worker mobility serves two purposes. The first is to confirm the size of the wage changes following a movement to a different firm. This is important as at least part of the large wage increases documented for movers from domestic to foreign firms (and vice-versa) could be driven by the characteristics of foreign firms, particularly those that hire those movers. The second purpose of this analysis is to contrast the "selection effects" before and after the worker moves between firms.
We conduct our analysis by estimating the following equation:
(10) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII],
where [w.sub.it] represents the logarithm of the average real wage of worker i in year t, X are worker controls (schooling, quadratics in tenure and experience, and gender), F are firm controls (log firm size--measured by the number of workers, industry and region dummies, and a foreign-firm dummy) that now concern the firm to which the worker moves, and [[gamma].sub.t] are year fixed effects.
The mobility dummies are defined in a similar way as before, except that, as mentioned earlier, the point of view is now based on the period after the mobility took place. For instance,
(11) [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII],
where s is the worker-firm spell, as defined earlier.
The results from different specifications based on Equation (10) are presented in Table 9. The results suggest a very strong "selection effect" as regards to movers from foreign to domestic firms. These workers tend to be very generously placed along the wage distribution of their firms, as the premium ranges between 4.6% and 12.8% (columns A to C). On the other hand, movers from domestic to foreign firms are, on average, slightly below similar workers pay levels (a negative premium of between -1.2% and -0.5%). Movers between domestic or between foreign firms tend to be well rewarded, particularly the latter.
With respect to wage growth, our evidence from Table 9 is very consistent with earlier findings. Wage growth of movers from foreign to domestic firms is negative, particularly when not controlling for firm characteristics (columns D and E). On the other hand, movers from domestic to foreign firms experience massive wage increases (from 18.9% to 10.7%). Movers between domestic or between foreign firms also experience wage gains, particularly the latter.
This paper provides comprehensive empirical evidence about the wage consequences of worker mobility between domestic and foreign firms. Using detailed matched employer-employee panel data from Portugal (covering both the manufacturing and services sectors), we trace virtually all spells of interfirm worker mobility in the country over a period of 10 yr (1991-2000).
Our results indicate that movements from domestic to foreign firms translate into considerable and robust average pay increases, of more than 10% in many cases. This pay increase is consistent with a "wage policy effect"--greater "generosity Generosity
See also Aid, Organizational; Kindness.
self-sacrificing priest; curé of Longueral. [Fr. Lit.: The Abbé Constantin, Walsh Modern, 105]
takes interest in Paul. [Br. Lit. " in the remuneration practices of foreign firms vis-a-vis their domestic counterparts. On the other hand, there is also a "selection effect," although typically much smaller. This latter effect arises as foreign firms hire workers that are, on average, already better remunerated re·mu·ner·ate
tr.v. re·mu·ner·at·ed, re·mu·ner·at·ing, re·mu·ner·ates
1. To pay (a person) a suitable equivalent in return for goods provided, services rendered, or losses incurred; recompense.
2. in their domestic firms than "similar" workers, even when conducting such comparison within each worker's firm. Moreover, our results for domestic firms are largely symmetric No difference in opposing modes. It typically refers to speed. For example, in symmetric operations, it takes the same time to compress and encrypt data as it does to decompress and decrypt it. Contrast with asymmetric.
(mathematics) symmetric - 1. to those for foreign firms. For instance, movers from foreign to domestic firms earn, on average, a large pay cut when they move, a finding that lends further support to the "wage policy" effect documented earlier.
Our results also prove to be very robust across different specifications and samples. This is particularly the case for the subset of displaced workers, whose mobility can be argued to be less subject to endogeneity concerns. However, we find that both the "wage policy" and the "selection" effects are somewhat weaker in the specific case of mobility of workers from foreign to domestic firms in some "high-skill" sectors. This result may help explain the apparent negative relationship between the foreign-firm wage premium and economic development (Heyman et al. 2007: Andrews et al. 2007; Martins and Esteves 2008) to the extent that high-skill sectors are more prevalent in developed economies.
Overall, our findings for the "wage policy" and "selection" effects can be easily reconciled. Foreign firms can attract the "best" workers as they offer them large wage increases. Such wage increases will presumably pre·sum·a·ble
That can be presumed or taken for granted; reasonable as a supposition: presumable causes of the disaster. more than compensate for the costs involved in the mobility process and therefore increase welfare in the host country.
Our results may also inform the debate about the productivity spillovers of foreign firms (Javorcik 2004) and, specifically, the role of worker mobility in those spillovers (Fosfuri et al. 2001; Balsvik 2006; Pesola 2007). Indeed, we find that domestic firms tend to hire "below-average" workers from foreign firms who take, on average, pay cuts (which is consistent with involuntary involuntary adj. or adv. without intent, will, or choice. Participation in a crime is involuntary if forced by immediate threat to life or health of oneself or one's loved ones, and will result in dismissal or acquittal.
INVOLUNTARY. mobility). These results suggest that worker mobility is unlikely to be a major source of productivity spillovers from foreign to domestic firms. In fact, our findings, including the result that foreign firms attract some of the "best" workers in domestic firms, suggest that, if any, productivity spillovers from worker mobility occur from domestic to foreign firms.
Finally, the stark contrast between our strong results from an analysis of worker mobility and the mixed findings from the approach based on foreign acquisitions also deserves attention. One possible way to reconcile the two sets of findings is that acquisitions involve only a subset of a wider range of foreign-firm involvement in host labor markets. For instance, such approach necessarily disregards all opportunities for wage increases that domestic workers have once foreign firms set up in their countries. While it is possible and even likely that some domestic firms also employ generous wage policies, our results clearly indicate that domestic workers find it beneficial to have foreign firms as potential employers of their labor.
FDI: Foreign Direct Investment
Abowd, J., F. Kramarz, and D. Margolis Margolis is a surname, and may refer to:
Aitken, B., A. Harrison Harrison, town (1990 pop. 13,425), Hudson co., NE N.J., an industrial suburb on the Passaic River opposite Newark; inc. 1869. The town has several foundries. Its manufactures include plastics, paperboard, and metal products. , and R. Lipsey. "Wages and Foreign Ownership: A Comparative Study of Mexico Mexico, city, Mexico
Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. , and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ." Journal of International Economics, 40(3-4), 1996, 345-71.
Almeida Al·mei·da , Francisco de 1450?-1510.
Portuguese colonial administrator who was the first viceroy of the Portuguese possessions in India (1505-1509). , R. "The Labor Market Effects of Foreign Owned Firms." Journal of International Economics, 72(1), 2007, 75-96.
Andrews, M., L., Bellman, T. Schank, and R. Upward. "The Takeover and Selection Effects of Foreign Ownership in Germany: An Analysis Using Linked Worker-Firm Data." GEP GEP
gastroenteropancreatic. , University of Nottingham The University of Nottingham is a leading research and teaching university in the city of Nottingham, in the East Midlands of England. It is a member of the Russell Group, and of Universitas 21, an international network of research-led universities. , Research Paper 2007/08. 2007.
Balsvik, R. "Is Mobility of Labour a Channel for Spillovers from Multinationals to Local Domestic Firms?" Norwegian Norwegian
associated in some way with Norway.
Norwegian buhund, Norwegian sheepdog
a medium-sized (26-40 lb), spitz-type dog with a short, dense coat in wheaten, black, red or sable, sometimes with black markings on the face, ears School of Economics and Business Administration Discussion Paper 25. 2006.
Bartelsman, E. J., and M. Doms. "Understanding Productivity: Lessons from Longitudinal Microdata Microdata Corporation was an Irvine, California based computer company, developing hardware and operating systems to run its REALITY environment. It later was taken over by its International distributor CMC Leasings, which in turn was taken over in 1983 by McDonnell Douglas ." Journal of Economic Literature, 38(3), 2000, 569-94.
Bjelland Bjelland is a former municipality in Vest-Agder county, Norway.
It was created by the split of Bjelland og Grindum municipality on January 1 1902. At that time Bjelland had a population of 907. , M., B. Fallick, J. Haltiwanger, and E. McEntarfer. "Employer-to-employer Flows in the United States: Estimates Using Linked Employer-Employee Data," Discussion Series 2007-30, Board of Governors of the Federal Reserve System. 2007.
Davis, S. J., J. C. Haltiwanger, and S. Schuh. Job Creation and Destruction. Cambridge Cambridge, city, Canada
Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , MA: MIT MIT - Massachusetts Institute of Technology Press, 1996.
Feenstra, R. C., and G. H. Hanson. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's
Maquiladoras maquiladoras (mäkē'lädō`räs), Mexican assembly plants that manufacture finished goods for export to the United States. The maquiladoras are generally owned by non-Mexican corporations. ." Journal of International Economics, 42(3-4), 1997, 371-93.
Fosfuri, A., M. Motta, and T. Ronde n. 1. (Print.) A kind of script in which the heavy strokes are nearly upright, giving the characters when taken together a round look. . "Foreign Direct Investment and Spillovers through Workers' Mobility." Journal of International Economics, 53(1), 2001, 205-22.
Girma, S., and H. Gorg. "Evaluating the Causal causal /cau·sal/ (kaw´z'l) pertaining to, involving, or indicating a cause.
relating to or emanating from cause. Effects of Foreign Acquisition on Domestic Skilled and Unskilled Wages." Journal of International Economics, 72(1), 2007, 97-112.
Heyman, F., F. Sjoholm, and P. G. Tingvall. "Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data." Journal of International Economics, 73(2), 2007, 355-76.
Huttunen, K. "The Effect of Foreign Acquisition on Employment and Wages: Evidence from Finnish Establishments." The Review of Economics and Statistics, 89(3), 2007, 497-509.
Jacobson, L. S., R. J. LaLonde The typical French surname Lalonde or LaLonde (archaic spelling) is the name of:
Javorcik, B. S. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages." American Economic Review, 94(3), 2004, 605-27.
Martins, P. S. "Do Foreign Firms Really Pay Higher Wages'? Evidence from Different Estimators," IZA IZA International Zeolite Association
IZA Institut zur Zukunft der Arbeit (Institute for the Study of Labor)
IZA International Zinc Association Discussion Paper 1388. 2004.
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Martins, P. S., and L. Esteves. "Foreign Ownership, Employment and Wages in Brazil: Evidence from Acquisitions, Divestments and Job Movers." IZA Discussion Paper 3542. 2008.
Pakes, A., and S. Nitzan. "Optimum Contracts for Research Personnel, Research Employment, and the Establishment of Rival Enterprises." Journal of Labor Economics, 1(4), 1983, 345-65.
Pesola, H. "Foreign Ownership, Labour Mobility and Wages." Helsinki School of Economics Helsinki School of Economics (HSE, Finnish: Helsingin kauppakorkeakoulu) is the premier business university in Finland, internationally accredited by AACSB, AMBA and EQUIS. Discussion Paper 175, 2007.
(1.) Huttunen (2007) finds positive effects on wages from foreign acquisitions, Girma and Gorg (2007) find positive effects for some types of acquisitions but no effects for other types, and Almeida (2007) finds small or no effects. See Andrews et al. (2007) also for a thorough survey of the literature.
(2.) See Martins and Esteves (2008) for a different analysis of worker interfirm mobility, based on the case of Brazil. See also Bjelland et al. (2007) for recent evidence of interfirm mobility in the United States.
(3.) The census is designed to check compliance with employment laws. It also serves general statistical purposes. Firms that do not fill in the census questionnaire correctly are subject to penalties that are perceived to have ensured high levels of data quality.
(4.) Strictly speaking Adv. 1. strictly speaking - in actual fact; "properly speaking, they are not husband and wife"
properly speaking, to be precise , this threshold is neither a necessary nor a sufficient condition for a firm to be controlled by a foreign investor. However, we believe 50% is the optimal level in terms of separating firms with a large enough foreign presence from the remaining firms. In any case, our results are not sensitive to a definition based on a threshold of 10% of voting rights.
(5.) This enables us to consider that foreign firms are virtually the same as multinational firms, sidestepping the debate about whether it is multinationality or foreign ownership that matters (Heyman et al. 2007).
(6.) Although it is possible to consider a longer period, worker-level data have not been made available by the Ministry of Employment for 1990 and 2001. Therefore, the analysis of a longer period would introduce time gaps in our study.
(7.) See Martins (2007) and Martins (2009) for other examples of, respectively, worker and firm longitudinal analysis based on the same data set.
(8.) Amongst other results, almost 40% of all workers are female, the average tenure is 8.7 yr, and 7.8% of workers are employed by foreign firms. The average net job creation rate (weighted by firm size) is 3.7%. (The net job creation rate is defined as NJC NJC National Joint Council (Canada)
NJC National Judicial College
NJC National Junior College (Singapore)
NJC Nordic Journal of Computing
NJC Nanyang Junior College (Singapore) = [L.sub.t] - [L.sub.t-1]/0.5([L.sub.t] + [L.sub.t-]), in which [L.sub.t] denotes the number of workers in period t [Davis et al. 1996].)
(9.) A job spell is defined as a set of all years in which a worker is continuously employed by the same firm.
(10.) We do not need to impose extra conditions such as [[eta].sub.is] [not equal to] [[eta].sub.i,s-1], where [[eta].sub.is] denotes the firm employing worker i in spell s, when [FD.sub.is] = 1, indicating that the worker moves to a different firm, as we have ruled out firm acquisitions, given our sample design. However, the effect of the foreign-firm dummy variable can be estimated out of (a very small number of) two-period movers who return to the same firm after that firm has undergone a domestic or foreign acquisition.
(11.) For instance, if the positive relationship between firm size and wages is driven by rent sharing, then when controlling for firm size, the domestic-to-foreign mobility coefficient would wrongly fail to pick up the wage increase related to rent sharing.
(12.) For instance, column F of Table 5 indicates that there are virtually no differences in wage growth between workers who moved from foreign to domestic firms or from domestic to foreign firms when they reach their fourth year in their new firms. However, in the fourth year, there may be important selection issues, as the sample drops to almost one-third of its original size in the second year.
(13.) Very occasionally, data for (smaller) firms exhibit gaps in some years. We conduct our analysis making sure these gaps are not regarded as displacements.
(14.) Moreover, we also replicated our analysis with different alternative measures of skill, including worker experience, tenure, and wages (Martins 2008) with very similar results.
PEDRO S. MARTINS *
* I thank, without implicating im·pli·cate
tr.v. im·pli·cat·ed, im·pli·cat·ing, im·pli·cates
1. To involve or connect intimately or incriminatingly: evidence that implicates others in the plot.
2. , Erling Barth, Andrew Bernard Ber·nard , Claude 1813-1878.
French physiologist noted for his study of the digestive and nervous systems. , John Earle Notable people named John Earle include:
(born Jan. 20, 1946, Missoula, Mont., U.S.) U.S. director. Trained as an artist, he studied in Europe and began experimenting with film in the late 1960s. de Meza, Claudio Piga, conference/seminar participants at SOFI So´fi
n. 1. Same as Sufi. (Stockholm), FIEF fief: see feudalism.
In European feudalism, a vassal's source of income, granted to him by his lord in exchange for his services. The fief usually consisted of land and the labor of peasants who were bound to cultivate it. (Stockholm), ISF ISF - Information Systems Factory (Oslo), Central European University CEU was established in 1991 with campuses in Prague, Czech Republic, and Budapest, Hungary, after an idea of several Central European intellectuals received financial support from George Soros. (Budapest), ZEW ZEW Zentrum für Europäische Wirtschaftsforschung (German: Centre for European Economic Research) (Mannheim), IPEA IPEA Institute of Applied Economic Research
IPEA Instituto de Pesquisa e Economia Aplicada (Institute of Applied Economic Research, Brazil)
IPEA International Private Energy Association (Brasilia), EALE (Prague), CEG-IST (Lisbon), Queen Mary Queen Mary, Queen Marie, or Queen Maria may refer to: Queens
ESRC Environmental Sciences Research Center
ESRC Engineers & Scientists Resources & Construction (US Army Corps of Engineers)
ESRC Exxonmobil Singapore Recreation Club (RES-062-23-0546) and Banco de Portugal The Banco de Portugal is the central bank of the Republic of Portugal. Established by a royal charter of 19 November 1846 to act as a commercial bank and issuing bank, it came about as the result of a merger of the Banco de Lisboa and the Companhia de Confiança Nacional, an is gratefully acknowledged.
Martins: School of Business and Management, Queen Mary, University of London, Mile End Road, London El 4NS, United Kingdom; CEG-IST, Lisbon, Portugal. Phone +44/0 2078827472, Fax +44/0 2078823615, E-mail firstname.lastname@example.org
TABLE 1 Descriptive Statistics--All Workers Variable Mean (Std. Dev.) N Log hourly pay 1.383 (0.612) 10,419,465 Schooling 6.892 (3.689) 11,302,053 Female 0.39 (0.488) 11,552,228 Tenure 8.705 (8.599) 11,552,228 Experience 23.892 (12.318) 11,302,053 Foreign firm 0.078 (0.268) 11,552,228 For-to-Dom 0.005 (0.069) 11,552,228 Dom-to-For 0.006 (0.076) 11,552,228 Dom-to-Dom 0.074 (0.261) 11,552,228 For-to-For 0.001 (0.035) 11,552,228 Log firm size 4.469 (2.316) 11,552,228 Net job creation rate 0.037 (0.259) 10,697,558 Notes: "Foreign" is a dummy taking value I if the firm-year is foreign owned (and value 0 otherwise). "Dom-to-For" is a dummy taking value 1 if the worker moves in that period from a domestic firm to a foreign firm (and value 0 otherwise), that is, if in the next period the worker will be at a foreign firm. "Dom-to-Dom" is a dummy taking value 1 if the worker moves from a domestic firm to another domestic firm (and value 0 otherwise). "For-to-Dom" is a dummy taking value 1 if the worker moves from a foreign firm to a domestic firm (and value 0 otherwise). "For-to-For" is a dummy taking value 1 if the worker moves from a foreign firm to another foreign firm (and value 0 otherwise). TABLE 2 Descriptive Statistics--All Workers Moving from Foreign to Domestic Firms (left) or between Foreign Firms (right), While at Foreign Firm Variable Mean (St.Dev.) N Log hourly pay 1.573 (0.664) 51,434 Wage growth -0.063 (0.551) 48,085 Schooling 8.734 (4.103) 52,954 Female 0.398 (0.49) 54,565 Tenure 2.89 (4.284) 54,565 Experience 15.173 (9.743) 52,954 Foreign firm 1 (0) 54,565 Log firm size 5.769 (1.709) 54,565 Net job creation rate 0.12 (0.383) 51,058 Industry switcher 0.668 (0.471) 54,564 Year gap 1.28 (0.449) 54,565 1992 0.071 (0.257) 54,565 1993 0.1 (0.3) 54,565 1994 0.075 (0.264) 54,565 1995 0.099 (0.298) 54,565 1996 0.107 (0.309) 54,565 1997 0.144 (0.351) 54,565 1998 0.167 (0.373) 54,565 1999 0.14 (0.347) 54,565 Variable Mean (St.Dev.) N Log hourly pay 1.741 (0.702) 13,588 Wage growth 0.058 (0.529) 13,238 Schooling 9.896 (4.189) 13,838 Female 0.426 (0.495) 14,232 Tenure 3.789 (5.579) 14,232 Experience 14.086 (9.388) 13,838 Foreign firm 1 (0) 14232 Log firm size 5.781 (1.74) 14,232 Net job creation rate 0.116 (0.418) 13,346 Industry switcher 0.576 (0.494) 14232 Year gap 1.281 (0.45) 14,232 1992 0.062 (0.242) 14,232 1993 0.093 (0.29) 14,232 1994 0.067 (0.251) 14,232 1995 0.096 (0.294) 14,232 1996 0.116 (0.32) 14,232 1997 0.192 (0.394) 14,232 1998 0.166 (0.372) 14,232 1999 0.141 (0.348) 14,232 Notes: See description of variables in notes of Table 1. "Wage growth" denotes the difference in the logarithm of the hourly wage between years t + 1 and t. "Industry switcher" is a dummy variable taking value 1 if the worker is in a different two-digit industry in year t + 1 when compared with year t. "Year gap" is the year difference between the 2 yr over which the worker moves between firms (by design, this is between one and two). TABLE 3 Descriptive Statistics-All Workers Moving from Domestic to Foreign Firms (left) or between Domestic Firms (right), While at Domestic Firm Variable Mean (St.Dev.) N Log hourly pay 1.334 (0.642) 61,811 Wage growth 0.217 (0.526) 59,583 Schooling 8.314 (3.961) 64,371 Female 0.442 (0.497) 66,609 Tenure 2.8 (4.413) 66,609 Experience 14.592 (9.638) 64,371 Foreign firm 0 (0) 66,609 Log firm size 4.437 (2.079) 66,609 Net job creation rate 0.099 (0.386) 59,346 Industry switcher 0.684 (0.465) 66,607 Year gap 1.252 (0.434) 66,609 1992 0.097 (0.296) 66,609 1993 0.114 (0.317) 66,609 1994 0.085 (0.279) 66,609 1995 0.091 (0.288) 66,609 1996 0.099 (0.299) 66,609 1997 0.124 (0.33) 66,609 1998 0.148 (0.355) 66,609 1999 0.166 (0.372) 66,609 Variable Mean (St.Dev.) N Log hourly pay 1.174 (0.55) 776,666 Wage growth 0.064 (0.507) 726,018 Schooling 6.821 (3.471) 821,424 Female 0.368 (0.482) 849,294 Tenure 3.132 (4.494) 849,294 Experience 17.871 (10.747) 821,424 Foreign firm 0 (0) 849,294 Log firm size 3.656 (1.934) 849,294 Net job creation rate 0.072 (0.368) 744,665 Industry switcher 0.529 (0.499) 849,293 Year gap 1.263 (0.44) 849,294 1992 0.103 (0.304) 849,294 1993 0.118 (0.323) 849,294 1994 0.087 (0.282) 849,294 1995 0.098 (0.297) 849,294 1996 0.105 (0.306) 849,294 1997 0.127 (0.333) 849294 1998 0.14 (0.347) 849,294 1999 0.124 (0.329) 849,294 Note: See description of variables in notes of Tables 1. TABLE 4 Wage Equations-All Workers A B C Foreign firm 0.136 -0.002 (.001) *** (.002) For-to-Dom 0.002 -0.004 -0.002 (.003) (.002) (.002) Dom-to-For 0.023 0.008 0.008 (.002) *** (.002) *** (.002) *** Dom-to-Dom -0.009 0.005 0.007 (.0006) *** (.0006) *** (.0007) *** For-to-For 0.071 0.017 0.022 (.005) *** (.004) *** (.004) *** Worker controls x x x Firm controls x x x Worker fixed effects Firm fixed effects x Firm-year fixed effects x Obs. 42,85,462 4,285,467 4,285,467 [R.sup.2] 0.579 0.713 0.77 D E Foreign firm 0.085 0.043 (.001) *** (.001) *** For-to-Dom -0.0008 -0.011 (.002) (.002) *** Dom-to-For -0.095 -0.059 (.002) *** (.002) *** Dom-to-Dom -0.048 -0.031 (.0006) *** (.0006) *** For-to-For -0.041 -0.034 (.003) *** (.003) *** Worker controls x x Firm controls x Worker fixed effects x x Firm fixed effects Firm-year fixed effects Obs. 4,285,467 4,285,462 [R.sup.2] 0.874 0.879 Notes: Dependent variable: log real hourly wage. Worker-level controls are schooling, experience and its square, tenure and its square, and a female dummy variable. Firm-level controls are region and industry dummies and firm size. "Foreign firm" is a dummy taking value 1 if the firm-year is foreign owned (and value 0 otherwise). "Dom-to-For" is a dummy taking value I for workers who are in the current employment spell at a domestic firm and will in the next employment spell be at a foreign firm (and value 0 otherwise). "For- to-For" is a dummy taking value I for workers who are in the current employment spell at a foreign firm and will in the next employment spell be at a foreign firm (and value 0 otherwise). "For-to-Dom" is a dummy taking value 1 for workers who are in the current employment spell at a foreign firm and will in the next employment spell be at a domestic firm (and value 0 otherwise). "Dom-to-Dom" is a dummy taking value I for workers who are in the current employment spell at a domestic firm and will in the next employment spell be at a different domestic firm (and value 0 otherwise). "For-to-For" is a dummy taking value 1 for workers who are in the current employment spell at a foreign firm and will in the next employment spell be at a different foreign firm (and value 0 otherwise). All specifications include year dummies. Robust standard errors, clustered at the worker level. Significance levels: *: .10; **: .05; ***: .01. TABLE 5 Wage Growth Equations-Only Workers Who Stay in t + 2, t + 3, or t + 4 in Same Firm as in t + l t + 2 Wage Growth in: A B Foreign firm 0.002 0.0002 (.001) ** (.003) For-to-Dom 0.025 0.020 (.003) *** (.004) *** Dom-to-For 0.046 0.046 (.003) *** (.003) *** Dom-to-Dom 0.014 0.015 (.0008) *** (.001) *** For-to-For 0.042 0.040 (.006) *** (.006) *** Worker controls x x Firm controls x x Firm fixed effects x Obs. 1,343,810 1,343,813 [R.sup.2] 0.007 0.119 t + 3 Wage Growth in: C D Foreign firm 0.003 0.018 (.001) ** (.004) *** For-to-Dom 0.007 0.008 (.003) ** (.004) * Dom-to-For 0.021 0.022 (.003) *** (.003) *** Dom-to-Dom 0.009 0.009 (.0009) *** (.001) *** For-to-For 0.030 0.029 (.006) *** (.007) *** Worker controls x x Firm controls x x Firm fixed effects x Obs. 839,529 839,532 [R.sup.2] 0.005 0.153 t + 4 Wage Growth in: E F Foreign firm -0.002 -0.015 (.002) (.005) *** For-to-Dom 0.005 0.005 (.004) (.005) Dom-to-For 0.014 0.018 (.003) *** (.004) *** Dom-to-Dom 0.005 0.008 (.001) *** (.002) *** For-to-For 0.009 0.004 (.007) (.009) Worker controls x x Firm controls x x Firm fixed effects x Obs. 552,900 552,902 [R.sup.2] 0.005 0.186 Notes: Dependent variable: growth of the real hourly wage. Worker- level controls are schooling, experience and its square, tenure and its square, and a female dummy variable. Firm-level controls are region and industry dummies and firm size. "Foreign firm" is a dummy taking value 1 if the firm-year is foreign owned (and value 0 otherwise). "Dom-to-For" is a dummy taking value 1 for workers who are in the current employment spell at a domestic firm and will in the next employment spell be at a foreign firm (and value 0 otherwise). See notes to Table 4 for descriptions of remaining variables. All specifications include year dummies. Robust standard errors, clustered at the worker level. Significance levels: *: .10; **: .05; ***: .01. TABLE 6 Descriptive Statistics-Only Movers Who Are Displaced Variable Mean (Std. Dev.) N Log hourly pay 1.157 (0.562) 163,652 Wage growth 0.065 (0.493) 152,025 Schooling 6.685 (3.432) 177,144 Female 0.401 (0.49) 183,638 Tenure 3.686 (5.059) 183,638 Experience 19.29 (11.176) 177,144 Foreign firm 0.048 (0.213) 183.638 For-to-Dour 0.038 (0.192) 183,638 Dom-to-For 0.056 (0.229) 183,638 Dom-to-Dom 0.897 (0.304) 183,638 For-to-For 0.009 (0.096) 183,638 Log firm size 3.165 (1.956) 183,638 Net job creation rate 0.024 (0.443) 149,013 Industry switcher 0.463 (0.499) 183,636 Year gap 1.269 (0.443) 183,638 1992 0.099 (0.298) 183,638 1993 0.157 (0.364) 183,638 1994 0.082 (0.274) 183.638 1995 0.097 (0.296) 183,638 1996 0.099 (0.299) 183,638 1997 0.119 (0.324) 183,638 1998 0.131 (0.338) 183,638 1999 0.136 (0.342) 183.638 Notes: "Displaced movers" are those that left firms that leave the data or that left firms that were undergoing major downsizing (net job creation of -40% or less). See description of variables in notes to Tables 1 and 2. TABLE 7 Wage Equations--Only Movers Included Are Those Displaced A B C Foreign firm 0.140 0.0001 (.001) *** (.002) For-to-Dom 0.009 -0.038 -0.076 (.008) (.008) *** (.015) *** Dom-to-For 0.049 0.017 0.031 (.006) *** (.006) *** (.008) *** Dom-to-Dom -0.0003 0.013 0.022 (.001) (.002) *** (.005) *** For-to-For 0.062 -0.003 -0.045 (.016) *** (.015) (.021) ** Worker controls x x x Firm controls x x x Worker fixed effects Firm fixed effects x Firm-year fixed effects x Obs. 2,260,710 2,260,713 2,260,713 [R.sup.2] 0.621 0.752 0.809 D E Foreign firm 0.056 0.030 (.002) *** (.002) *** For-to-Dom 0.021 0.026 (.005) *** (.005) *** Dom-to-For -0.089 -0.028 (.004) *** (.004) *** Dom-to-Dom -0.028 -0.008 (.001) *** (.001) *** For-to-For -0.019 0.006 (.009) ** (.009) Worker controls x x Firm controls x Worker fixed effects x x Firm fixed effects Firm-year fixed effects Obs. 2,260,713 2,260,710 [R.sup.2] 0.933 0.934 Notes: "Displaced movers" are those who left firms that leave the data or who left firms that were undergoing major downsizing (see more details in the main text). Dependent variable: log real hourly wage. Worker-level controls are schooling, experience and its square, tenure and its square, and a female dummy variable. Firm-level controls are region and industry dummies and firm size. "Foreign firm" is a dummy taking value 1 if the firm-year is foreign owned (and value 0 otherwise). "Dom-to-For" is a dummy taking value 1 for workers who are in the current employment spell at a domestic firm and will in the next employment spell be at a foreign firm (and value 0 otherwise). See notes to Table 4 for descriptions of remaining variables. All specifications include year dummies. Robust standard errors, clustered at the worker level. Significance levels: *: .10; **: .05; ***: .01. TABLE 8 Wage Equations-Only Workers from "High-Skill" Industries A B C Foreign firm 0.167 -0.003 (.002) *** (0.003) For-to-Dom -0.017 0.008 0.007 (.003) *** (.003) ** (.004) ** Dom-to-For 0.021 0.013 0.011 (.003) *** (.003) *** (.003) *** Dom-to-Dom -0.025 0.009 0.011 (.001) *** (.001) *** (.001) *** For-to-For 0.057 0.024 0.028 (.005) *** (.005) *** (.006) *** Worker controls x x x Firm controls x x x Worker fixed effects Firm fixed effects x Firm-year fixed effects x Obs. 1,534,477 1,534.482 1,534.482 [R.sup.]2 0.581 0.722 0.776 D E Foreign firm 0.063 0.041 (.002) *** (.002) *** For-to-Dom -0.027 -0.037 (.003) *** (.003) *** Dom-to-For -0.117 -0.090 (.003) *** (.003) *** Dom-to-Dom -0.082 -0.060 (.001) *** (.001) *** For-to-For -0.053 -0.050 (.004) *** (.004) *** Worker controls x x Firm controls x Worker fixed effects x x Firm fixed effects Firm-year fixed effects Obs. 1,534.482 1,534,477 [R.sup.]2 0.903 0.906 Notes: "High-skill" industries defined as those at the top third of the schooling distribution. Dependent variable: log real hourly wage. Worker-level controls are schooling, experience and its square, tenure and its square, and a female dummy variable. Firm-level controls are region and industry dummies and firm size. "Foreign firm" is a dummy taking value I if the firm-year is foreign owned (and value 0 otherwise). "Dom-to-For" is a dummy taking value 1 for workers that are in the current employment spell at a domestic firm and will in the next employment spell be at a foreign firm (and value 0 otherwise). See notes to Table 4 for descriptions of remaining variables. All specifications include year dummies. Robust standard errors, clustered at the worker level. Significance levels: *: .10; **: .05: ***: .01. TABLE 9 Wage Equations--All Workers, Variables Measured "After" Moving to New Firm A B C Foreign firm 0.157 -0.009 (.001) *** (.003) *** FD 0.128 0.052 0.046 (.002) *** (.002) *** (.003) *** DF -0.005 -0.015 -0.012 (.002) ** (.002) *** (.002) *** DD 0.047 0.016 0.013 (.0007) *** (.0007) *** (.0008) *** FF 0.125 0.064 0.062 (.005) *** (.005) *** (.005) *** Worker controls x x x Firm controls x x x Worker fixed effects Firm fixed effects x Firm-year fixed effects x Obs. 4,183,008 4,183,009 4,183,009 [R.sup.2] 0.562 0.704 0.764 D E Foreign firm 0.100 0.054 (.002) *** (.002) *** FD 0.039 0.042 (.002) *** (.002) *** DF 0.089 0.053 (.002) *** (.002) *** DD 0.040 0.037 (.0007) *** (.0007) *** FF 0.066 0.053 (.003) *** (.003) *** Worker controls x x Firm controls x Worker fixed effects x x Firm fixed effects Firm-year fixed effects Obs. 4,183,009 4,183,008 [R.sup.2] 0.88 0.884 Notes: Dependent variable: log real hourly wage. Worker-level controls are schooling, experience and its square, tenure and its square, and a female dummy variable. Firm-level controls are region and industry dummies and firm size. "Foreign firm" is a dummy taking value I if the firm-year is foreign owned (and value 0 otherwise). "Dom-to-For" is a dummy taking value 1 for workers who are in the current employment spell at a domestic firm and will in the next employment spell be at a foreign firm (and value 0 otherwise). See notes to Table 4 for the descriptions of remaining variables. All specifications include year dummies. Robust standard errors, clustered at the worker level. Significance levels: *: .10; **: .05; ***: .01.