Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34898 
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers No. 3542
Publisher: 
Institute for the Study of Labor (IZA), Bonn
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: 
Document Type: 
Working Paper

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