Exposure to global markets, internal labour markets, and worker compensation: Evidence from Canadian microdata

Abstract

In this paper we address two bodies of sociological research: the effects of globalization and theories of pay. Most sociological writings on globalization emphasize its negative consequences. Most sociological writings on pay allow no role for productivity but, rather, assert the importance of power in the production of labour market outcomes. In this paper we examine the effects of three forms of globalization-exporting, foreign ownership, and outsourcing-and include in our analysis institutional features of organizations typically associated with worker power. Using the rich data available in the Workplace and Employee Survey we find: i) pay tends to be higher in workplaces that export and are foreign owned; ii) employees in more productive workplaces are paid more; iii) pay is higher where internal labour markets are present; and iv) treating productivity and power as alternative explanations for pay differentials is a mistake. © Canadian Journal of Sociology.