Kiel Working Papers, Kiel Institute for World Economics
No 1454:
Multinational Firms and Heterogeneous Workers
Mario Larch and Wolfgang Lechthaler
Abstract: In the presence of increasing specialization of workers it
becomes more and more difficult for firms to find the most suitable
workers. In such an environment a multinational corporation has an
advantage because it can exchange workers between plants in different
countries. In this way it can draw on a larger labor market pool, reducing
the mismatch of its workforce. This paper analyzes the consequences of this
advantage for production, employment and, most prominently, wages. We are
able to disentangle the effects of worker heterogeneity and firm
heterogeneity on wages and show that the latter is important to explain why
multinationals typically pay higher wages
Keywords: Heterogeneous labor; Multinational, firms; Intra-wage distribution; Heterogeneous firms; (follow links to similar papers)
JEL-Codes: F23,; F12,; J41; (follow links to similar papers)
37 pages, October 2008
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