NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Xuan Li

LSK 6042, Department of Economics
Hong Kong University of Science and Technology
Clear Water Bay, Kowloon
Hong Kong

E-Mail: xuanli@ust.hk
Institutional Affiliation: Hong Kong University of Science and Technology

NBER Working Papers and Publications

February 2020Across-Country Wage Compression in Multinationals
with Jonas Hjort, Heather Sarsons: w26788
Many employers link wages at the firm’s establishments outside of the home region to the level at headquarters. Multinationals that anchor-to-the headquarters also transmit wage changes arising from shocks to minimum wages and exchange rates in the home country/state to their foreign establishments. Such multinationals fire more low-skill workers and hire fewer new workers abroad after a permanent (minimum wage-induced) foreign establishment wage increase originating in shocks to headquarter wages, but not after a temporary (exchange rate-induced) one. We show this using data on 1,060 multinationals’ establishments across the world and in employee-level data on the same employers’ establishments in Brazil.
 
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