Higher wages in exporters and multinational firms evidence from linked employer-employee data

This study investigates whether exporters, multinational enterprises (MNEs), and foreign-owned firms pay higher wages in Japan, using linked employer-employee data. It shows that wages of foreign-owned and domestically-owned MNEs are the highest and that wages of non-multinational exporters are higher than those of non-multinational non-exporters. The ordering of wages, with MNEs having the highest wages and exporters having higher wages than purely domestic firms, is consistent with the productivity ordering of the standard firm heterogeneity model. Even after controlling for observable plant and worker characteristics, this ordering of wages remains the same. It further finds that the residual wage premiums for foreign firms are much higher than those for non-multinational exporters and domestically-owned MNEs. The results from quantile regressions reveal that the residual wage premium is larger in the higher quantiles of the wage distribution for foreign firms, whereas I do not find a similar tendency for domestically-owned firms. Finally, this study finds that female workers receive much larger wage premiums in foreign firms than male workers.