The productivity and wage effects of foreign acquisition in the United Kingdom

Authors: Conyon, Martin J.¹; Girma, Sourafel²; Thompson, Steve³; Wright, Peter W.⁴

Source: Journal of Industrial Economics, Volume 50, Number 1, March 2002 , pp. 85-102(18)

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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%.

Document Type: Original article

DOI: http://dx.doi.org/10.1111/1467-6451.00169

Affiliations: 1: The Wharton School, University of Pennsylvania, USA and Warwick Business School, University of Warwick, UK, 2: School of Economics, University of Nottingham, UK, 3: Department of Economics, University of Leicester, UK, 4: CEPR and School of Economics, University of Nottingham, UK Peter.Wright@Nottingham.ac.uk

Publication date: 2002-03-01