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The Productivity and Wage Effects of Foreign Acquisition in the United Kingdom

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<mark>Journal publication date</mark>03/2002
<mark>Journal</mark>Journal of Industrial Economics
Issue number1
Volume50
Number of pages18
Pages (from-to)85-102
Publication StatusPublished
<mark>Original language</mark>English

Abstract

This paper provides a systematic empirical analysis of the impact of foreign ownership on productivity and wages 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. Firms which are acquired by foreign companies exhibit an increase in labour productivity of 13%.