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Globalised labour markets? International rent sharing across 47 countries
journal contribution
posted on 2023-06-09, 02:27 authored by Pedro Martins, Yong YangWe present evidence about the role of rent sharing in fostering the interdependence of labour markets around the world. Our results draw on a firm-level panel of more than 2,000 multinationals and over 5,000 of their affiliates, covering 47 home and host countries. We find considerable evidence that multinationals share profits internationally by paying higher wages to their workers in foreign affiliates in periods of higher headquarter profits. This occurs even across continents, and not only within Europe, as shown in earlier research. The results are robust to different tests, including a falsification exercise based on ‘matched’ parents. Finally, we show that rent sharing is higher when the affiliate is located in countries with specific relative characteristics, such as lower economic development or taxation, while it falls with the number of affiliates. We argue that these results are consistent with transfer pricing and bargaining views.
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Publication status
- Published
File Version
- Published version
Journal
British Journal of Industrial RelationsISSN
0007-1080Publisher
WileyExternal DOI
Issue
4Volume
53Page range
664-691Department affiliated with
- Business and Management Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2016-08-10First Compliant Deposit (FCD) Date
2021-03-05Usage metrics
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