While foreign-owned firms have consistently been found to pay higher wages than domestic firms to what appear to be equally productive workers, the causes of this remain unresolved. In a two-period bargaining framework we show that if training is more productive and specific in foreign firms, foreign firm workers will have a steeper wage profile and thus acquire a premium over time. Using a rich employer-employee matched data set we verify that the foreign wage premium is only acquired by workers over time spent in the firm and only by those that receive on-the-job training, thus providing empirical support for a firm-specific human capital acquisition explanation. © 2007 Kiel Institute.
CITATION STYLE
Görg, H., Strobl, E., & Walsh, F. (2007). Why do foreign-owned firms pay more? the role of on-the-job training. Review of World Economics, 143(3), 464–482. https://doi.org/10.1007/s10290-007-0117-9
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