Foreign Ownership and Wages in the United States, 1987 - 1992

Are Profits Shared Across Borders? Evidence on International Rent Sharing

“…Globerman et al (1994) report that foreign affiliates in Canada pay higher wages than do Canadian establishments, but that this differential is not due to ownership per se but rather to foreign affiliates being larger and more capital intensive. Howenstine and Zeile (1994), Doms and Jensen (1998), and Feliciano and Lipsey (1999) find the same for U.S. manufacturing: foreign affiliates pay more than U.S. owned establishments, but only because of scale, capital-use, and technology differentials rather than ownership per se. But Doms and Jensen also report that multinational establishments, be they U.S. or foreign owned, pay significantly more than purely domestic plants do even controlling for other performance factors.…”

Global Production Sharing and Rising Inequality: A Survey of Trade and Wages

“…20 See also Brainard and Riker (1997) and Riker and Brainard (1997). Lipsey (1994) and Feliciano and Lipsey (1999) China, and to the neighboring province of Guandong in particular, which they manage from headquarters in Hong Kong (Sung, 1997). Hong Kong firms typically supply plants in China with raw materials and often ship the goods through Hong Kong for final processing before exporting them to a final destination.…”

Inward Foreign Direct Investment and Inter-Industry Wage Differentials in U.S. Manufacturing Industries

“…Threat effects theory suggests that the threat by firms to move production abroad, or the threat to outsource may have an important impact on wages and profits even in the absence of large price or quantity changes due to changes in the environment of capital mobility, such as the establishment of NAFTA and WTO (Crotty, Epstein andKelly, 1998, Rodrik, 1997;1999, Reddy 2000. If foreign investors use the threat to move or close plants in bargaining situations, labor unions 22 might perceive it as a more credible threat than domestic firms.…”

“…However, if foreign ownership tries a different management style, then local wages will also change accordingly. In the United States, approximately 95% of employment in new foreign direct investments have taken place in the form of acquisitions of existing local firms 6 between 1987 and 1992 (Feliciano and Lipsey, 1999). Therefore, their impact on U.S. labor market cannot be predetermined clearly as described above.…”

“…Approximately 95% of employment in new foreign direct investments was in acquired enterprises between 1987 and 1992 (Feliciano and Lipsey, 1999). Growing activity of foreign firms within industry could imply that domestic ownership has been simply converted to 20 foreign ownership.…”