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Across-Country Wage Compression in Multinationals

Jonas Hjort¹; Xuan Li²; Heather Sarsons³

¹ UCL, BREAD, CEPR, and University of Oslo (email: ) · ² HKUST (email: ) · ³ University of British Columbia, CEPR, and NBER (email: )

Many employers link wages at establishments outside of the home region to the level at headquarters. We show this using new data on 1,200 multinationals’ establishments across the world and linked employee-level data on their establishments in Brazil. Headquarters wage changes arising from minimum wage and exchange rate shocks are partially transmitted to workers employed in the same position abroad. Wage change transmission appears to be direct and results from firm-wide wage-setting procedures rather than associated technology or employment changes. “Anchored” wage setting is somewhat associated with particular characteristics of the job × employer × headquarters-establishment country-pair. (JEL F23, F31, J24, J31, J38, M16, O15)

DOI

10.1257/aer.20200042

Volume

116 (1)

Pages

52-87

Language

en

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BibTeX

Sources

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