The Inter-Industry Wage Structure of US Multinationals

Abstract: Little is known about wage determination by multinational firms, despite the much-discussed role of globalisation upon wage dispersion. We contribute to this topic by examining industry- and host-country-specific 1998 data on compensation of foreign affiliates of US firms and by comparing that with US labour market data. We find substantial differences in employment distributions, that the inter-industry wage structure of US affiliates is less dispersed than the same structure in the US and that the two industry wage premia are moderately correlated. These findings are consistent with the vertical model of FDI but do not support claims that multinationals increase wage inequality