Gender wage discrimination and the attractiveness of foreign MNC subsidiaries as employers for women

Abstract

Gender wage discrimination is a grand challenge that constrains economic growth worldwide and denies women fair opportunities. Yet, we know surprisingly little about how women’s own experiences of wage discrimination steer their career decisions. We adopt the perspective of job-seeking women and argue that prior exposure to wage discrimination reshapes their employer preferences. Specifically, it can flip the liability of foreignness typically faced by foreign MNCs into a perceived employer advantage because foreign MNCs can deviate from the host country’s gender-biased norms. We study this mechanism for 165,624 female professionals and managers who changed jobs in Denmark between 2002 and 2015, using a pay transparency law from 2006 for identifying the underlying mechanism. We find that women who have suffered larger wage discrimination in domestic employment are more likely to start working for foreign MNC subsidiaries. This effect is weaker in labor markets in which high-performing domestic employers can offer other benefits, such as reputation or job security. The effect is stronger when foreign MNC subsidiaries signal gender fairness through a higher share of women in management. Overall, our findings show how wage discrimination redirects female career paths, transforming a grand challenge into a strategic advantage for foreign MNCs.