TY  - JOUR
AU  - Budd,John W.
AU  - Konings,Josef
AU  - Slaughter,Matthew J.
TI  - International Rent Sharing in Multinational Firms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8809
PY  - 2002
Y2  - February 2002
UR  - http://www.nber.org/papers/w8809
L1  - http://www.nber.org/papers/w8809.pdf
N1  - Author contact info:
John W. Budd
Ctr for Human Resources & Labor Studies
University of Minnesota
3-300 Carlson School of Management
321 19th Avenue South
Minneapolis, MN  55455-0438
jbudd@umn.edu
E-Mail: jbudd@umn.edu

Matthew J. Slaughter
Tuck School of Business
Dartmouth College
100 Tuck Hall
Hanover, NH 03755
Tel: 603/646-2939
Fax: 603/646-0995
E-Mail: matthew.j.slaughter@dartmouth.edu
AB  - We use a unique firm-level panel data set of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms.  Using both fixed-effects and generalized method-of-moments estimators, affiliate wage levels are estimated to respond to both affiliate and parent profitability.  The elasticity of affiliate wages to parent profits per worker is approximately 0.03, which can explain over 20 percent of the observed variation in affiliate wages.  These results reveal a previously ignored aspect of labor-market rent sharing.  They also reveal an important micro-level linkage with potential macro-level implications. International rent sharing can transmit economic conditions across national borders, and can thereby provide an implicit cross-country risk-sharing mechanism.
ER  -