Nikolaj Malchow-Moller

Centre for Economic and Business Research
Porcelaenshaven 24B,
Copenhagen Business School
DK-2000 Frederiksberg Denmark

E-Mail: malchow@cebr.dk
Institutional Affiliation: CEBR

NBER Working Papers and Publications

March 2007Foreign Firms, Domestic Wages
with James R. Markusen, Bertel Schjerning: w13001
Foreign-owned firms are often hypothesized to generate productivity "spillovers" to the host country, but both theoretical micro-foundations and empirical evidence for this are limited. We develop a heterogeneous-firm model in which ex-ante identical workers learn from their employers in proportion to the firm?s productivity. Foreign-owned firms have, on average, higher productivity in equilibrium due to entry costs, which means that low-productivity foreign firms cannot enter. Foreign firms have higher wage growth and, with some exceptions, pay higher average wages, but not when compared to similarly large domestic firms. The empirical implications of the model are tested on matched employer-employee data from Denmark. Consistent with the theory, we find considerable evidence of higher...

Published: Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2013. "Foreign Firms, Domestic Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 292-325, 04. citation courtesy of

National Bureau of Economic Research
1050 Massachusetts Ave.
Cambridge, MA 02138

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