Department of Economics and Business Economics

Foreign Ownership and Skill-biased Technological Change

Research output: Working paperResearch

  • Michael Koch, University of Bayreuth, Germany
  • Marcel Smolka
We conduct an empirical investigation into the effects of foreign ownership on worker skills using firm-level data from Spain. To control for endogeneity bias due to selection into foreign ownership, we combine a difference-in-differences approach with a propensity score weighting estimator. Our results provide novel evidence that foreign-acquired firms actively raise the skills of their workforce in response to the acquisition by hiring high-skilled workers and providing worker training. To pin down the mechanism, we exploit unique information on whether firms use their foreign parent in exporting to foreign markets. Our results suggest a fundamental role for market access through the foreign parent in explaining skill upgrading in foreign-acquired firms. We reveal substantial productivity gains within foreign-acquired firms and we show that these gains derive from a concurrent effort to raise worker skills and adopt more advanced technology, suggesting a skill bias in technological innovations. We develop a simple theoretical model of foreign ownership featuring technology-skill complementarities in production that can rationalize our findings.
Original languageEnglish
Place of publicationMünchen
PublisherCESifo
Number of pages48
Publication statusPublished - Nov 2018
SeriesCESifo Working Paper
Number7332
ISSN2364-1428

    Research areas

  • multinational enterprises, mergers and acquisitions, skill-biased technological change, worker training, productivity

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