Theorie und Empirie zur Lohnprämie multinationaler Unternehmen
Zusammenfassung der Projektergebnisse
It has been the main purpose of this project to explore the nature and determinants of the wage premium offered by multinational enterprises (MNEs). The prevalent perception among policymakers and researchers is that MNEs generate good jobs paying considerably higher wages than their competitors. The academic interest lies in understanding the factors contributing to this wage premium. We have looked deeper into the research question and have analyzed to what extent the findings reported by previous studies that MNEs are exceptional producers that are larger, more productive, generate higher revenues and pay higher wages than their nonmultinational competitors can be equally observed for Germany. To answer this question, we have linked firm information on ownership, revenues, location and industry affiliation from the commercial provider Bureau van Dijk with administrative data on German workers provided by the Institute for Employment Research (IAB) in Nuremberg. The record linkage key produced by us span the years 2012 to 2017 and has been handed over to the Research Data Centre of the IAB for the potential use of other researchers. Based on this linked dataset, we have shed new light on the ownership structure for the wages received by German workers. For instance, we show evidence that the regional and hierarchical structure of ownership networks matters for wages paid by German establishments. For multinational groups, we find that both network characteristics are equally important, while hierarchical distance seems to matter as well for national groups in German ownership. This important research output has been published in Egger and Jahn (2020), whose main purpose has been to bring our new dataset to the attention of a wider readership. In Egger, Jahn and Kornitzky (2022), we also analyze the role of business group hierarchy for the wage payments in Germany but do so in a more systematic way. In particular, we recognize that ownership connections in business groups are complex and not just one-directional. To capture this feature, we have developed an index that measures the distance to the ultimate owner within these networks. After accounting for various explanatory factors, we find that workers tend to earn higher wages when they are further away from the ultimate owner in the business group hierarchy. To explain this pattern, we offer a theoretical model suggesting that higher wages are used to motivate workers and prevent them from shirking, especially when the ultimate owner in larger hierarchical distance is less able to monitor them closely. In Egger, Jahn and Kreickemeier (2024), we investigate the role of geographical distance to the ultimate owner for wage payments of its subsidiaries in Germany. Using our newly constructed dataset, we find that wages at German plants increase with the distance from the parent company. Additionally, foreign multinationals with headquarters close to their German plants pay lower wages compared to German multinationals, indicating a negative border effect. To explain this, we develop a model where wages are specific to each plant, and firms can either export or produce locally to serve foreign customers. The observed border and distance effects on wages occur in our model because exporting is less appealing for distant locations, prompting firms to offer higher wages for foreign production further away from their headquarters. Finally, we also use the linked dataset in a current unfinished research paper (Egger, Falkinger, and Jahn, 2025) in which we study the role of production and financial networks for the wage payments by German MNEs. Beyond the dataset specifically constructed for this project, we have also employed ready-to-use employer-employee data from the IAB to reassess the foreign ownership premium for Germany (Egger, Jahn, and Kornitzy, 2020). After showing evidence for the existence of a foreign ownership wage premium, relying on OLS regressions, we also use in our research paper a combination of propensity-score matching and a difference-indifference estimator to determine the causal effect of foreign takeovers. Our findings indicate that a foreign investor's takeover results in a wage premium of 4.0 log points in the first year after the ownership change, which further increases to 6.3 log points three years post-acquisition. This wage premium is most significant for high-skilled workers, aligning with theories of rent appropriation by managers, technology protection, and training on new technology. Additionally, we demonstrate that the wage premium is not influenced by an exporter effect from the foreign owner's platform investment. It takes approximately four years for the wage premium to fully develop. This wage premium does not disappear after foreign divestment and is specific to foreign acquisitions rather than ownership changes in general. The same linked employer-employee data has also been used in a single-authored research paper by Stefan Kornitzky (2023), one of the two PhD students financed by the project, to analyze how foreign takeover by a MNE affects the task composition in the production of German establishments. The empirical analysis reveals that foreign-owned establishments in Germany are significantly more focused on routine tasks. Furthermore, by employing a combination of propensity-score matching and a difference-in-difference estimator, the paper demonstrates that foreign takeovers result in a notable 0.2 percentage point decrease in the share of non-routine analytical tasks. This finding aligns with the theoretical argument that multinational firms find it more challenging to perform non-routine tasks abroad. Importantly, the observed reduction cannot be attributed to foreign owners restructuring the hierarchical organization of plants by adding or removing layers. The comprehensive analysis of the impact of foreign acquisitions on the task composition of plants presented in this chapter is crucial for developing a more complete understanding of the effects of foreign ownership on firms and workers. Finally, in the project we have also used business register data of the Federal Statistical Office to shed light on spatial differences in the performance of firms in Germany, depending on their ownership structure. While this dataset lacks information on wages and detailed workforce characteristics, it has the advantage of covering the universe of German firms and thus allows to highlight so far unexplored differences of national and multinational firms at a granular geographic level. For instance, Meier (2024), the second PhD student financed by the project, analyzes in a single-authored paper to what extent the vicinity to universities can explain firm productivity and how the role of universities differs for national and multinational producers. More specifically, he shows that firms located in counties with a university experience a 0.92 percent increase in revenues per employee compared to those in counties without a university. To mitigate potential endogeneity concerns, the analysis focuses on universities established for political reasons. The findings reveal that the presence of high-skilled labor, fostered by universities, significantly boosts firm performance. However, proximity to research-intensive universities, which generate substantial knowledge spillovers, is linked to weaker firm performance. This counterintuitive result is partly attributed to the networks of multinational firms. The business register data has also been employed in our so far unpublished manuscript Egger, Jahn and Meier (2025), which investigates the productivity advantages of multinational firms and how these vary between urban and rural areas. Thereby, we confirm that multinational firms are generally more productive than their national counterparts. Additionally, they uncover an urban productivity premium for national firms and a previously unrecognized rural productivity premium for multinational firms. By employing a two-stage treatment effects estimator, we demonstrate that foreign takeovers have a positive causal impact on the productivity of German firms, with this effect being more pronounced in rural areas than in urban ones. Furthermore, they identify local competition as a crucial factor in explaining these productivity patterns. Stronger competition may amplify the negative effects of outgoing knowledge spillovers on foreign technology leaders, making rural locations more attractive for them. Overall, using new data input, the research project contributes strongly to a better understanding of key patterns and determinants of the multinational wage premium. Thereby, our focus lies on the organizational structure of firms and the ownership structure in business groups as two particularly important factors for explaining the size of multinational wage premia. Beyond that, the project also provides novel insights into how and why geography matters for the performance of MNEs and the wages they offer to their workers in Germany.
Projektbezogene Publikationen (Auswahl)
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A previous version of this manuscript circulated under the title: “Distance and the Multinational Wage Premium” and has been published as CESifo Working Paper No. 7347.
Elke J. Jahn
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Ownership and the multinational wage premium. Applied Economics Letters, 27(5), 422-425.
Egger, Hartmut & Jahn, Elke
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Reassessing the foreign ownership wage premium in Germany. The World Economy, 43(2), 302-325.
Egger, Hartmut; Jahn, Elke & Kornitzky, Stefan
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How does the position in business group hierarchies affect workers’ wages?. Journal of Economic Behavior & Organization, 194, 244-263.
Egger, Hartmut; Jahn, Elke & Kornitzky, Stefan
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“How Does Foreign Ownership Influence the Task Composition in German Plants?” in Essays on Foreign Ownership, Multinational Business Groups and
Wages, Doctoral thesis. University of Bayreuth, Faculty of Law,
Business and Economics, p. 23-46
Kornitzky, Stefan
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Universities and Firm Performance: Evidence from Germany. German Economic Review, 25(2), 61-100.
Meier, Philipp
