GEP Research Paper 99/08

The Impact of Foreign Acquisition on Wages and Productivity in the UK

Martin Conyon, Sourafel Girma, Steve Thompson and Peter Wright

This paper was subsequently published in the Journal of Industrial Economics , Vol. 50, No. 1, pp.85-102, 2002.

Abstract

This paper provides a systematic empirical analysis of foreign ownership on the levels of wages and productivity in the United Kingdom. Using a specially constructed database for the period 1989-1994, it uses ownership change (acquisition) to control for unobserved differences between plants. It finds that foreign firms pay equivalent employees 3.4% more than domestic firms, though this is wholly attributable to their higher levels of productivity.

Issued in July 1999.

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