Abstract
This study investigates whether exporters, multinational enterprises (MNEs), and foreign-owned firms pay higher wages in Japan, using linked employer–employee data. It shows that wages of foreign-owned and domestically-owned MNEs are the highest and that wages of non-multinational exporters are higher than those of non-multinational non-exporters. The ordering of wages, with MNEs having the highest wages and exporters having higher wages than purely domestic firms, is consistent with the productivity ordering of the standard firm heterogeneity model. Even after controlling for observable plant and worker characteristics, this ordering of wages remains the same. It further finds that the residual wage premiums for foreign firms are much higher than those for non-multinational exporters and domestically-owned MNEs. The results from quantile regressions reveal that the residual wage premium is larger in the higher quantiles of the wage distribution for foreign firms, whereas I do not find a similar tendency for domestically-owned firms. Finally, this study finds that female workers receive much larger wage premiums in foreign firms than male workers.
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Notes
Heyman et al. (2007) also distinguish domestically-owned MNEs from foreign-owned firms. Although they define a domestically-owned MNE as a firm that reports positive exports to other firms within MNEs, this study defines a domestically-owned MNE as a firm that has a foreign subsidiary. The definition of this paper is preferable because it is consistent with standard firm heterogeneity models such as Helpman et al. (2004) and Egger and Kreickemeier (2013).
All three surveys are conducted as Fundamental Statistics according to the Statistics Act.
See the MHLW website (http://www.mhlw.go.jp/english/database/db-l/wage-structure.html) for more details.
See the MIC website (http://www.stat.go.jp/english/data/e-census/index.htm) for more details.
See the MIC website (http://www.stat.go.jp/english/data/e-census/2012/index.htm) for more details.
See Kawaguchi (2011) for more details.
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Acknowledgements
I would like to thank Juan Carlucci, Banri Ito, Naoto Jinji, David Jinkins, and other participants of the ETSG conference in Helsinki for their helpful comments. I appreciate anonymous referees for their helpful comments. I am grateful to the Ministry of Health, Labour and Welfare for providing the micro data of the Basic Survey on Wage Structure employed in this study. I am also grateful to the Ministry of Internal Affairs and Communications for providing the micro data of the Economic Census for Business Frame and the Economic Census for Business Activity employed in this study. I thank Yuki Ishiduka for her helpful assistance to obtain the micro data and I would like to express my sincere condolences on her untimely death.
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I gratefully acknowledge the financial support from the Japan Society for the Promotion of Science’s Grants-in-Aid for Scientific Research (No. 24730234, 15K17063, 19K01612) and the Nomura foundation’s Grant for Social Science (N20-3-E30-002) and Grant for Gender-related Research (N20-4-W30-002). This study is conducted as a part of the Project “The effects of FDI on domestic employment and wage” undertaken at Research Institute of Economy, Trade and Industry (RIETI).
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Tanaka, A. Higher wages in exporters and multinational firms evidence from linked employer–employee data. Int Econ Econ Policy 19, 51–78 (2022). https://doi.org/10.1007/s10368-021-00517-2
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DOI: https://doi.org/10.1007/s10368-021-00517-2