Do Foreign-Owned Firms Provide Better WorkingConditions Than Their Domestic Counterparts?A Comparative Analysis

This paper analyses to what extent working conditions in foreign-owned firms differ fromthose in their domestic counterparts. It makes three main contributions. First, we replicate theconsensus in the empirical literature by applying a standardised methodology to firm-leveldata for three developed (Germany, Portugal, UK) and two emerging economies (Brazil,Indonesia). We show that, consistent with previous evidence, foreign-owned firms offersubstantially higher average wages than domestic firms and that this difference is particularlyimportant in emerging economies. Second, we show that these positive wage effects offoreign takeovers reduce in size when controlling for changes in the composition of theworkforce, although they tend to remain positive and statistically significant. However, thewage effects associated with worker movements from domestic to foreign firms arepotentially important, particularly in emerging economies. Third, we look not only at wageoutcomes but also consider other working conditions such as working hours, job stability andunion coverage. We find that foreign takeovers of domestic firms tend to have a smallpositive effect on wages, but little effect on other aspects of working conditions....