Globalised Labour Markets?International Rent Sharing across 47 Countries

We present evidence about the role of rent sharing in fostering the interdependence of labourmarkets around the world. Our results draw on a firm-level panel of more than 2,000multinationals and more than 5,000 of their affiliates, covering 47 home and host countries.We find considerable evidence that multinationals share profits internationally, by payinghigher wages to their workers in foreign affiliates in periods of higher profits. This occurs evenacross continents, and not only within Europe, as shown in earlier research. The results arerobust to different tests, including a falsification exercise based on ‘matched’ parents. Finally,we show that different measures of the heterogeneity between parents and affiliates tend toincrease rent sharing while the number of affiliates tends to decrease rent sharing, results weargue are consistent with bargaining views....