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Title:Foreign ownership, employment and wages in Brazil: evidence from acquisitions, divestments and job movers PDF Logo
Authors:Martins, Pedro Silva
Esteves, Luiz A.
Issue Date:2008
Series/Report no.:IZA Discussion Papers 3542
Abstract:How much do developing countries benefit from foreign investment? We contribute to this question by comparing the employment and wage practices of foreign and domestic firms in Brazil, using detailed matched firm-worker panel data. In order to control for unobserved worker differences, we examine both foreign acquisitions and divestments and worker mobility, including the joint estimation of firm and worker fixed effects. We find that changes in ownership do not tend to affect wages significantly, a result that holds both at the worker- and firm-levels. However, divestments are related to large job cuts, unlike acquisitions. On the other hand, movers from foreign to domestic firms take larger wage cuts than movers from domestic to foreign firms. Moreover, on average, the fixed effects of foreign firms are considerably larger than those of domestic firms, while worker selection effects are relatively small.
Subjects:Foreign direct investment
ownership changes
worker mobility
JEL:J31
Persistent Identifier of the first edition:urn:nbn:de:101:1-20080619140
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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