IZA DP No. 3607: Paying More to Hire the Best? Foreign Firms, Wages and Worker Mobility
published in: Economic Inquiry, 2011, 49 (2), 349–363
In the context of the debate on the labour-market consequences of globalisation, we examine worker mobility in order to identify the wage differences between foreign and domestic firms. Using matched employer-employee panel data for Portugal, we consider virtually all spells of interfirm mobility over a period of ten years. We find that foreign firms offer significantly more generous wage policies, although there is also a (smaller) selection effect. The results are robust to the consideration of wage growth differences, the case of displaced workers and different subsets of workers.