Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46164
Authors: 
Martins, Pedro Silva
Yang, Yong
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5283
Abstract: 
We present evidence about the role of rent sharing in fostering the interdependence of labour markets around the world. Our results draw on a firm-level panel of more than 2,000 multinationals and more than 5,000 of their affiliates, covering 47 home and host countries. We find considerable evidence that multinationals share profits internationally, by paying higher wages to their workers in foreign affiliates in periods of higher profits. This occurs even across continents, and not only within Europe, as shown in earlier research. The results are robust to different tests, including a falsification exercise based on 'matched' parents. Finally, we show that different measures of the heterogeneity between parents and affiliates tend to increase rent sharing while the number of affiliates tends to decrease rent sharing, results we argue are consistent with bargaining views.
Subjects: 
multinationals
profit sharing
wage determination
JEL: 
J31
J41
J50
Document Type: 
Working Paper

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