Multinational production and the skill premium

We develop a quantitative general equilibrium model to examine the impact of multinational produc-tion on the within-country wage gap between skilled and unskilled workers. The model predictions are consistent with salient features of multinational firms in the data. Counterfactuals of a two -country analysis show that, when enabling multinational production, aggregate welfare increases in both countries while the wage gap widens in the developed country and shrinks in the less-developed country.(c) 2022 Elsevier B.V. All rights reserved.