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  4. May 2024
  5. Global Managers, Local Workers: Wage Setting inside a Multinational Firm

AEA Papers and Proceedings

ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)

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Global Managers, Local Workers: Wage Setting inside a Multinational Firm

  • Virginia Minni
AEA Papers and Proceedings
vol. 114, May 2024
(pp. 586–91)
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Abstract

How are wages set within a multinational firm? Combining cross-country data on wages and labor regulations with personnel records of a large multinational firm, I find that wage setting depends on the rank of the employee in the firm hierarchy. For managers, wages are set by the headquarters regardless of local labor market conditions. For factory workers, wages are adjusted according to country-specific wages and labor regulations. These results suggest that the multinational's internal labor market shields managers from changes in external market conditions, while the firm adapts to local labor markets for factory workers.

Citation

Minni, Virginia. 2024. "Global Managers, Local Workers: Wage Setting inside a Multinational Firm." AEA Papers and Proceedings, 114: 586–91. DOI: 10.1257/pandp.20241076

Additional Materials

JEL Classification

  • D22 Firm Behavior: Empirical Analysis
  • F23 Multinational Firms; International Business
  • J31 Wage Level and Structure; Wage Differentials
  • J41 Labor Contracts
  • K31 Labor Law
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics