Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1453: How International Experience Helps Shape Labor Market Outcomes

Carl Davidson, Fredrik Heyman (), Steven Matusz, Fredrik Sjöholm () and Susan Chun Zhu
Additional contact information
Carl Davidson: Michigan State University
Fredrik Heyman: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Steven Matusz: Michigan State University
Fredrik Sjöholm: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Susan Chun Zhu: Michigan State University

Abstract: This paper examines how experience from working in a foreign-owned firm affects worker mobility. International experience can be expected to provide a worker with knowledge about foreign operations, thereby making them more attractive to other employers who are also engaged in international business. We follow workers in local Swedish firms where some experience an internationalization shock when their firm is acquired by a foreign multinational firm. Matching acquired firms with a group of similar control firms and applying a stacked difference-in-differences estimation approach, we find that international experience increases the likelihood of job switching to a multinational firm by around 4 percentage points and decreases the likelihood of job switching to a local firm by around 5 percentage points. Moreover, the post-acquisition wage growth rate is 10 percentage points higher for workers moving to MNEs as compared to stayers at acquired firms, leading to a steeper wage growth trajectory for movers to MNEs.

Keywords: Globalization; Multinational firms; FDI; Job mobility

JEL-codes: F16; F66; J60

Language: English

51 pages, December 22, 2022

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