Global managers, local workers: wage setting inside a multinational firm

Minni, Virginia Magda Luisa (2024) Global managers, local workers: wage setting inside a multinational firm. CEP Discussion Papers (CEPDP1975). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

How are wages set within a multinational firm? Combining cross-country data on wages and labor regulations with personnel records of a large multinational firm, I find that wage setting depends on the rank of the employee in the firm hierarchy. For managers, wages are set by the headquarters regardless of local labor market conditions. For factory workers, wages are adjusted according to country-specific wages and labor regulations. These results suggest that the multinational's internal labor market shields managers against changes in external market conditions, while the firm adapts to local labor markets for factory workers.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	STICERD
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification:	F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues)
Date Deposited:	19 Feb 2025 11:48
Last Modified:	19 Feb 2025 11:57
URI:	http://eprints.lse.ac.uk/id/eprint/126836

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