Working Paper No. 674

Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data

Published: November 14, 2006, revised March 27, 2007Pages: 36Keywords: FDI, Foreign Ownership, Wages, Matched Employer-Employee Data, Propensity Score MatchingJEL-codes: F23; J31; C23

Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data Fredrik Heyman, Fredrik Sjöholm and Patrik Gustavsson Tingvall

Numerous studies on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages.


Fredrik Heyman


Ph: +46 8 665 4537

Fredrik Sjöholm


Ph: +46 46 222 74 26

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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