Scandinavian Working Papers in Economics

Working Paper Series,
Trade Union Institute for Economic Research

No 199: Is there Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data

Fredrik Heyman , Fredrik Sjöholm () and Patrik Gustavsson Tingvall ()
Additional contact information
Fredrik Heyman: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden
Fredrik Sjöholm: The European Institute of Japanese Studies, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm , Sweden
Patrik Gustavsson Tingvall: The European Institute of Japanese Studies, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm , Sweden, and FIEF

Abstract: Numerous studies based on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increases with foreign ownership. Using detailed matched employer-employee data, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign ownership with both domestic multinationals and local firms. Our results indicate that employees in foreign-owned firms do not have systematically higher wages than comparable workers in similar Swedish owned firms.

Keywords: FDI; Foreign ownership; Wages; Matched Employer-Employee data; Propensity score matching

JEL-codes: C23; F23; J31

24 pages, December 16, 2004

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