International Rent Sharing in Multinational Firms / John W. Budd, Josef Konings, Matthew J. Slaughter.

Format:

Book

Author/Creator:

Budd, John W.

Contributor:

National Bureau of Economic Research.

Konings, Josef.

Slaughter, Matthew J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8809.

NBER working paper series no. w8809

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

We use a unique firm-level panel data set of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms. Using both fixed-effects and generalized method-of-moments estimators, affiliate wage levels are estimated to respond to both affiliate and parent profitability. The elasticity of affiliate wages to parent profits per worker is approximately 0.03, which can explain over 20 percent of the observed variation in affiliate wages. These results reveal a previously ignored aspect of labor-market rent sharing. They also reveal an important micro-level linkage with potential macro-level implications. International rent sharing can transmit economic conditions across national borders, and can thereby provide an implicit cross-country risk-sharing mechanism.

Notes:

Print version record

February 2002.