Foreign Ownership, Exporting and Gender Wage Gaps: Evidence from Japanese Linked Employer-Employee Data

Greaney, Theresa M. and Tanaka, Ayumu (2020): Foreign Ownership, Exporting and Gender Wage Gaps: Evidence from Japanese Linked Employer-Employee Data.

Abstract

We explore potential relationships between international economic activities and gender wage gaps (GWGs) using linked employer-employee data for Japan. We find evidence that exporting and multinational activities are associated with reduced GWGs. Domestic-owned firms that neither export nor invest abroad (i.e., domestic-only firms) report the largest GWG, followed by Japanese-owned multinational enterprises (JMNE), then by locally-owned exporters that do not invest abroad and finally by foreign-owned multinational enterprises (FMNE). We separate FMNE by mode of entry and confirm that FMNE established by greenfield investment deviate more than FMNE established by merger and acquisition from domestic-only firms in terms of wages. Greenfield-born FMNE are associated with the smallest GWG and largest gender-neutral wage premium among the firm types. The estimated GWG among Greenfield-born FMNE is almost 12 percentage-points lower than the 26.8 percent prevailing at domestic-only firms.

• Item Type: MPRA Paper
• Language: English
• Keywords: gender wage gap, wage premium, exporters, multinational enterprises
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials

References

Aitken, B., A. Harrison and R. E. Lipsey (1996), Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States, Journal of International Economics 40, 3-4,345–71.

Becker, G. S. (1957), (1971). The Economics of Discrimination, Chicago: University of Chicago Press.

Berik, G., Y. van der Meulen Rodgers, and J.E. Zveglich, Jr. (2004). International Trade and Gender Wage Discrimination: Evidence from East Asia, Review of Development Economics 8(2): 237-254.

Bernard, A. B. and B. Jensen (1995), Exporters, Jobs, and Wages in U.S. Manufacturing: 1976–87, Brookings Papers on Economic Activity: Microeconomics, 1995, 67–112.

Bernard, A. B. and B. Jensen (1997), Exporters, Skill Upgrading and the Wage Gap, Journal of International Economics, 42, 1–2, 3–31.

Bernard, A. B. and Jensen, J. B. (1999). Exceptional Exporter Performance: Cause, Effect, or Both?, Journal of International Economics 47: 1-25.

Black, S. E. and E. Brainerd (2004). “Importing equality? The impact of globalization on gender discrimination, Industrial and Labor Relations Review 57: 540-559.

Blinder, A. (1973). Wage Discrimination: Reduced Form and Structural Estimates, Journal of Human Resources 8 (4): 436-455.

Blau, F. D. and L. M. Kahn, (2003). Understanding International Differences in the Gender Pay Gap, Journal of Labor Economics 21(1): 106-144.

Bloom, N., R. Sadun, and J. Van Reenen (2012). The Organization of Firms Across Countries, Quarterly Journal of Economics 127: 1663-1705.

Bloom, N. and J. Van Reenen (2007). Measuring and Explaining Management Practices across Firms and Countries, Quarterly Journal of Economics 122: 1351–1408.

Bøler, E. A., B. Javorcik, and K. H. Ulltveit-Moe (2018), “Working across time zones: Exporters and the gender wage gap,” Journal of International Economics 111: 122-33.

Cameron, A. C. and P. K. Trivedi (2010). Microeconometrics using Stata, College Station, TX: Stata Press.

Choi, J. and T. M. Greaney (2020). Global Influences on Gender Inequality: Evidence from Female Employment in Korea, University of Hawai‘i Economics Department Working Paper No. 20-3R.

Frías, J. A., D. S. Kaplan, E. A. Verhoogen and D. Alfaro-Serrano (2018). Exports and Wage Premia: Evidence from Mexican Employer-Employee Data, unpublished, Columbia University.

Girma, S. and H. Gorg (2007). “Evaluating the Foreign Ownership Wage Premium using a Difference-in-Differences Matching Approach,” Journal of International Economics, 72, 97–112.

Greaney, T. M. and Y. Li (2016). Examining Determinants of Foreign Wage Premiums in China, The World Economy 40: 2056-2077.

Guiso, L., P. Sapienza, and L. Zingales (2006). Does Culture Affect Economic Outcomes?, Journal of Economic Perspectives 20: 23–48.

Hara, H. (2018). The gender wage gap across the wage distribution in Japan: Within- and between-establishment effects, Labour Economics 53: 213-229.

Heyman, F., F. Sjoholm, and P. G. Tingvall (2007). Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data, Journal of International Economics, 73, 355–376.

Hijzen, A., P. S. Martins, T. Schank, and R. Upward (2013). Foreign-Owned Firms around the World: A Comparative Analysis of Wages and Employment at the Micro-Level, European Economic Review, 60, 170–188.

Hoshi, T. and K. Kiyota (2019). Potential for inward foreign direct investment in Japan, Journal of the Japanese and International Economies: 52: 32-52.

Japan Revitalization Strategy: Japan is Back, June 14, 2013, (accessed on July 26, 2019), available from URL: http://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/en_saikou_jpn_hon.pdf .

Juhn, Chinhui, Gergely Ujhelyi, and Carolina Villegas-Sanchez (2014). Men, women, and machines: How trade impacts gender inequality, Journal of Development Economics 106: 179–193.

Kambayashi, R. and T. Kato (2010). The Japanese Employment System after the Bubble Burst: New Evidence, in K. Hamada, A.K. Kashyap, and D.E. Weinstein (eds.), Japan’s Bubble, Deflation, and Long-Term Stagnation, The MIT Press, pp. 217-262.

Kato, T. and N. Kodama (2018). Women in the Workplace and Management Practices: Theory and Evidence, in S.L. Averett, L.M. Argys, and S.D. Hoffman (eds.), Oxford Handbook of the Economics of Women, Oxford University Press, New York.

Kawaguchi, A. (2015). Internal labor markets and gender inequality: Evidence from Japanese micro data, 1990-2009, Journal of The Japanese and International Economies 38: 193-213.

Kawaguchi, D. (2007). A Market Test for Sex Discrimination: Evidence from Japanese Panel Data, International Journal of Industrial Organization 25(3): 441-460.

Kawaguchi, D (2011). Applying the Mincer Wage Equation to Japanese Data (in Japanese), RIETI Discussion Paper Series, 11-J-026.

Kodama, N., B. S. Javorcik, and Y. Abe (2018). Transplanting corporate culture across international borders: Foreign direct investment and female employment in Japan, The World Economy 41 (5): 1148–1165.

Koenker, R. and K. Hallock (2001). Quantile Regression: An Introduction, Journal of Economic Perspectives, 15, 43–56.

Lipsey, R. and Sjoholm, F. (2004). Foreign direct investment, education and wages in Indonesian manufacturing, Journal of Development Economics 73: 415-422.

Martins, P. S. (2011). Paying More to Hire the Best? Foreign Firms, Wages, and Worker Mobility, Economic Inquiry, 49, 349–363.

Matsui, K., H. Suzuki, K. Tatebe, and T. Akiba (2014). Womenomics 4.0: Time to Walk the Talk, Japan Portfolio Strategy, May 30, 2014, The Goldman Sachs Group, Inc.

Mincer, J. (1974). Schooling, Experience, and Earnings, New York: NBER Press.

Munch, J. R. and J. R. Skaksen (2008). Human Capital and Wages in Exporting Firms, Journal of International Economics, 75, 363–372.

Oaxaca, R. (1973). Male-Female Wage Differentials in Urban Labor Markets, International Economic Review 14 (3): 693-709.

OECD (2019). International Direct Investment Statistics, data downloaded from OECD.Stat on May 20, 2019. https://stats.oecd.org/index.aspx?lang=en

OECD (2017). The Pursuit of Gender Equality: An Uphill Battle, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264281318-en

Oostendorp, R. H. (2009). Globalization and the Gender Wage Gap, World Bank Economic Review 23 (1): 141–161.

Ono, H. (2007). Careers in Foreign-Owned Firms in Japan, American Sociological Review 72: 267-290.

Ono, H. (2010). Lifetime employment in Japan: Concepts and measurements, Journal of the Japanese and International Economies 24: 1-27.

Ono, H. and K. Odaki (2011). Foreign Ownership, Human Capital, and the Structure of Wages in Japan, The International Journal of Human Resource Management 22(15): 3036-3050.

Schank, T., C. Schnabel, and J. Wagner (2007). Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer-Employee data, Journal of International Economics 72: 52–74.

Schank, T., C. Schnabel, and J. Wagner (2010). Higher Wages in Exporting Firms: Self-Selection, Export Effect, or Both? First Evidence from Linked Employer-Employee Data, Review of World Economics, 146, 303–322.

Seguino, S. (2000). The effects of structural change and economic liberalization on gender wage differentials in South Korea and Taiwan, Cambridge Journal of Economics 24: 437-459.

Siegel, J., L. Pyun, and B. Y. Cheon (2019). Multinational Firms, Labor Market Dis- crimination, and the Capture of Outsider’s Advantage by Exploiting the Social Divide, Administrative Science Quarterly 64 (2): 370–397.

Tang, H. and Y. Zhang (2017). Do Multinationals Transfer Culture? Evidence on Female Employment in China, Technical Report, CESifo Group Munich.

Vahter, P. and J. Masso (2019). “The contribution of multinationals to wage inequality: foreign ownership and the gender pay gap”, Review of World Economics 155: 105-148.

Verhoogen, E. A. (2008). Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector, The Quarterly Journal of Economics, 123, 489–530.

World Economic Forum, The Global Gender Gap Report 2020, 2012.