Wages and international rent sharing in multinational firms

We use a unique firm-level panel of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms. Affiliate wages are estimated to respond to both affiliate and parent profitability. The elasticity of affiliate wages to parent pro...

Full description

Saved in:
Bibliographic Details
Published in:The review of economics and statistics 2005-02, Vol.87 (1), p.73-84
Main Authors: Budd, J.W, Konings, J, Slaughter, M.J
Format: Article
Language:English
Subjects:
Coefficients
Corporate affiliates
Correlations
Economic rent
Employment
equations
Extractive industries
Financial performance
International trade
leasing
literature reviews
mathematical models
Multinational corporations
Outsourcing
Profit sharing plans
Profits
profits and margins
Regression analysis
Studies
Subsidiaries
Wages
Wages & salaries
wages and remuneration
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We use a unique firm-level panel of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms. Affiliate wages are estimated to respond to both affiliate and parent profitability. The elasticity of affiliate wages to parent profits per worker is approximately 0.03, which can explain over 20% of observed variation in affiliate wages. These results reveal a previously ignored aspect of rent sharing. They also reveal an important micro-level linkage with potential macro-level implications. International rent sharing can transmit economic conditions across countries, and can thereby provide an implicit risk-sharing mechanism.
ISSN:0034-6535
1530-9142
DOI:10.1162/0034653053327586