American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Across-Country Wage Compression in Multinationals
American Economic Review
(pp. 52–87)
Abstract
Many employers link wages at establishments outside of the home region to the level at headquarters. We show this using new data on 1,200 multinationals' establishments across the world and linked employee-level data on their establishments in Brazil. Headquarters wage changes arising from minimum wage and exchange rate shocks are partially transmitted to workers employed in the same position abroad. Wage change transmission appears to be direct and results from firm-wide wage-setting procedures rather than associated technology or employment changes. "Anchored" wage setting is somewhat associated with particular characteristics of the job × employer × headquarters-establishment country-pair.Citation
Hjort, Jonas, Xuan Li, and Heather Sarsons. 2026. "Across-Country Wage Compression in Multinationals." American Economic Review 116 (1): 52–87. DOI: 10.1257/aer.20200042Additional Materials
JEL Classification
- F23 Multinational Firms; International Business
- F31 Foreign Exchange
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J38 Wages, Compensation, and Labor Costs: Public Policy
- M16 International Business Administration
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration