Abstract
We investigate differences in gender wage gaps between foreign-owned and domestically owned firms in Poland, a country that has experienced large FDI inflows over the past three decades. We show that the adjusted gender wage gaps are larger among employees working in the foreign-owned sector than in the domestic sector. The gender pay gaps are found to be larger in the foreign-owned companies than in the domestically owned firms at every decile of the wage distribution, with the largest disparities being observed at the bottom and at the top. Our findings also show that in the foreign-owned sector, the returns to individual, job, and firm characteristics earned by women are much lower than the returns earned by men, but that the foreign-owned firms appear to pay higher firm-specific wage premia to women than to men, thereby narrowing within-firm gender wage inequality. These patterns differ from those observed in the domestic sector, in which firm wage premia tend to widen within-firm wage distributions, and contribute to the overall level of gender wage inequality.
Highlights
A number of studies have shown that, contrary to most theoretical predictions, the gender wage gap tends to be larger in foreign-owned companies than in domestically owned firms
How can we reconcile the findings of positive firm effects and negative price effects among foreign-owned firms? In other words, why do female workers working in foreign-owned firms earn so much less than their male colleagues if these companies have narrower within-firm gender wage gaps? Apart from the omitted variable bias, the sorting channel is one of the potential explanations: i.e. women are likely to be underrepresented at firms that pay higher firm-specific wage premia (Card et al 2016)
Contrary to most theoretical expectations, gender pay gaps are larger in foreign-owned firms than in domestically owned firms
Summary
A number of studies have shown that, contrary to most theoretical predictions, the gender wage gap tends to be larger in foreign-owned companies than in domestically owned firms. While in the foreign-owned sector the returns to individual, job, and firm characteristics earned by women are much lower than the returns earned by men, foreign-owned firms appear to pay higher firm-specific wage premia to women than to men, thereby narrowing withinfirm gender wage inequality. These patterns differ from those observed in the domestic sector, where firm wage premia widen within-firm wage distributions, and contribute to overall wage inequality.
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