KCG Lunch-time Seminar

Exporters, Multinationals and Residual Wage Inequality: Evidence and Theory — Sarah Schroeder, Ph.D.

27 Feb 2020


Prof. Sarah Schroeder, Ph.D. (Aarhus University)


This paper studies the implications for wage inequality of two distinct forms of globalisation, namely trade and foreign direct investment.  I use German linked employer-employee data to (1) jointly estimate the exporter and the multinational wage premium and (2) to further distinguish between wage premia of multinational firms that are foreign owned (inward FDI) and domestically owned (outward FDI). My findings exhibit a clear hierarchy of firms’ international  activities  with  regard  to  wage  premia  and  workforce  ability.  I  interpret  these patterns  using  a  theoretical  framework,  which  incorporates  ex-ante  homogeneous  workers, heterogeneous  firms  and  search  and  matching  frictions  into  a  multi-region  model  of  trade and FDI with monopolistic competition. The model allows me to account for the observed empirical patterns, and delivers novel insights about the interplay between trade, FDI and labour market institutions.


Medienraum (A-211)