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Foreign Ownership Wage Premia in Emerging Economies: Evidence from Czech Republic

Research output: Contribution to conferencePaperResearchpeer-review

  • Department of Economics
  • Center for Corporate Performance (CCP)

In this paper we look the relationship between wages, labour productivity and ownership using a linked employer-employee dataset covering a large fraction of the Czech labor market during years 2005 and 2006. We distinguish different origins of ownership and study wage and productivity differences. We found that the raw difference in average firm wages between foreign and domestically owned firms is around 25 per cent, respectively. Accounting for differences in the compositions in firms' workforces, as measured by firm means of human capital variables, for regions and industries firm size the difference drops to 16 percent. The unconditional differences relative to domestic firms differ widely by continents of origin: it is 24 per cent for the EU15 countries, 22 per cent for other European countries and 28 per cent for the U.S. owned companies. There is no significant pay difference between domestic firms and the Asian owned firms. Controlling for human capital, firm size, region and industry, again decreases the wage differentials. Similarly as previous studies we observe that estimations of wage premium conducted on firm level data are higher than when estimated on individual data. The unconditional foreign ownership premium is considerably  smaller than for firm average wage, around 6 per cent for year 2006. Secondly, and more importantly, when we add human capital variables, region and industry dummies and firm size to the wage regression, the differential surprisingly even increases. In the full model, the foreign ownership premium is 14 per cent.

Original languageEnglish
Publication year2009
Publication statusPublished - 2009
EventThe EALE 2009 conference. The 21st Annual Conference og the European Association of Labour Economists - Tallinn, Estonia
Duration: 10 Sep 200912 Sep 2009

Conference

ConferenceThe EALE 2009 conference. The 21st Annual Conference og the European Association of Labour Economists
CountryEstonia
CityTallinn
Period10/09/200912/09/2009

    Research areas

  • Foreign ownership wages

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