Wages and International Rent Sharing in Multinational Firms

Budd, John W, Konings, Jozef ORCID: 0000-0003-1280-4674 and Slaughter, Matthew J (2005) Wages and International Rent Sharing in Multinational Firms. Review of Economics and Statistics, 87 (1). pp. 73-84. ISSN 0034-6535, 1530-9142

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Abstract

We use a unique firm-level panel of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms. Affiliate wages 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 of observed variation in affiliate wages. These results reveal a previously ignored aspect of rent sharing. They also reveal an important micro-level linkage with potential macro-level implications. International rent sharing can transmit economic conditions across countries, and can thereby provide an implicit risk-sharing mechanism.

Item Type:	Article
Uncontrolled Keywords:	38 Economics, 3801 Applied Economics, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour
Depositing User:	Symplectic Admin
Date Deposited:	06 Nov 2018 11:11
Last Modified:	24 May 2025 11:48
DOI:	10.1162/0034653053327586
Related Websites:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3028415