The increase in foreign direct investments raises concerns about labor market consequences in many countries. It is feared that multinational ﬁrms are inclined to shift jobs abroad and increase job volatility. We use ﬁrm-level data to examine if multinationality and foreign ownership affect the wage elasticity of labor demand. Unlike previous studies, we distinguish the effect on different skill groups of employees. We ﬁnd no general difference in wage elasticity between foreign and domestic ﬁrms but the wage elasticity is higher in multinational ﬁrms than in national ﬁrms, in particular for medium-skilled workers.
Review of World Economics
Multinationals, Skills, and Wage Elasticities