While an abundance of studies exists documenting the significant wage premium of multinationals (MNE) and the effects of foreign direct investments on wage inequality, much less is still known about ...how foreign ownership of firms affects the gender wage gap. Based on employer-employee level data from Estonia—a country with the largest gender wage gap in the EU—this study highlights a regularity that foreign owned firms on average display a substantially larger gender wage gap than domestic owned firms. Among different occupation groups, this result is especially evident among managers. Furthermore, this difference is also evident if we focus on acquisitions of domestic firms by foreign MNEs and estimate its effects based on propensity score matching. The resulting increase in the gender wage gap is due to men capturing a higher wage premium from working at foreign owned firms than women, although both tend to gain in terms of wages from being employed at foreign owned firms. We find evidence (albeit limited) suggesting that one of the explanations of the difference between foreign and domestic owned firms in the gender wage gap could be that foreign owned firms require more continuous commitment from their employees compared to other firms.
This paper investigates the effect of exporting on productivity, often referred to as “learning by exporting”, in the context of global value chains (GVCs). Although the rise of GVCs raised hopes ...that it would facilitate knowledge transfer from technologically advanced foreign buyers, empirical evidence on its role in learning by exporting is scant. We use data of Latvian and Estonian firms to observe how learning by exporting differs across types of exports associated with different kinds of participation in GVCs. We find that productivity gains resulting from export entry are significantly larger for specific types of exports, such as exports of knowledge-intensive services, intermediate goods and re-exports. These exports correspond to activities that generate high value added within GVCs. Our findings indicate that the intensity of interactions with global buyers alongside exporters’ room for technology catch-up define the extent of learning by exporting in GVCs.
Features of internationalization, such as trade, foreign direct investments, and international migration, are crucial for understanding the economic developments of small and open economies. However, ...studying internationalization at the country level may obscure significant heterogeneity in its relationship with economic growth and other economic and social outcomes. Regional accounts provide insights into the geography of internationalization, but collections of such disaggregated statistics are rarely provided by statistical bureaus. The purpose of this paper is twofold. First, we demonstrate how regional account data, including internationalization indicators, can be constructed to obtain consistent and homogeneous regional-level series using a combination of micro and macro data sources. Second, our aim is to foster spatial research on internationalization and the spatial economy in the Baltics by providing comprehensive data collection of socio-economic variables at the NUTS 3 regional level over time. This collection encompasses trade, FDI, and migration, enabling the study of internationalization and other features of the Baltic economy. We present a series of key features, revealing noticeable correlation patterns between regional development and internationalization.
Abstract
This paper investigates the productivity effects for domestic suppliers from joining and exiting the value chains of foreign-owned multinational enterprises (MNEs). Our econometric analysis ...is based on firm-to-firm transactions recorded in the value-added tax declarations’ data from Estonia and use of propensity score matching and difference-in-difference regression approach. The treatment analysis based on period 2015–2019 suggests that starting to supply the foreign-owned firms initially boosts the value added per employee of the domestic firms, including the effects on the scale of production and the capital–labor ratio. These first linkages to the foreign-owned MNEs do not affect the total factor productivity (TFP) of domestic firms, suggesting that the TFP effects take time to materialize. We find no significant positive effects on the second-tier suppliers: the positive effects are limited to the first-tier suppliers with direct links to foreign-owned firms. One novel result is the evidence that the productivity of suppliers does not fall, on average, after decreasing or ending supplier relationships with the foreign-owned firms. However, this average effect hides significant heterogeneity. Domestic firms with prior high levels of productivity and those at the time of exit from the MNE relationship start to export, gain in productivity in next periods, whereas the firms with low prior productivity levels lose.
Purpose This paper investigates the relationship of both technological (product and process) and non-technological (organizational and marketing) innovation with the gender wage gap at firms. ...Design/methodology/approach Using employer–employee level data from Estonia, the authors estimate Mincerian wage equations, in order to show how innovation at the firm level is associated with the gender wage gap. Next, the authors use propensity score matching (PSM) to study the effects of the movement of men and women into innovative firms, how this shapes the gender wage gap at firms. Findings The authors find that both technological and non-technological innovation are associated with a larger gender wage gap at firms. The relationship between innovation and the contemporaneous gender wage gap at firms reflects to a significant extent the different selection of men and women with different time-invariant characteristics to innovative firms. Further, the authors find that movement of men and women to work at innovative firms is in longer term associated with larger gains in wages for men. The authors also observe that the relationship of innovation with gender wage gap is stronger in the case of women with children. Originality/value Much of the prior analysis focuses on the effects of technological innovation on gender-related labour market outcomes. The authors show here that the relationship of innovation at firms with higher gender wage gap is not only specific to technological innovation, but is more general, and is observed across different types of innovation indicators, including non-technological innovation. This study's results suggest that the effects of innovation on gender wage gap may reflect to an extent the higher demand for flexibility of employees for work purposes at innovative firms, which may increase the gender wage gap, especially between men and women with children.
Considering the importance of innovation activities, especially that of young firms, for aggregate productivity growth, the study, using Estonian Community Innovation Survey (CIS) data, compares the ...productivity implications of R&D, capital accumulation, and innovation output for entrants and incumbents and contrasts the findings to those for Germany, a representative developed economy. First, in contrast to the developed economies, the percentage of innovating firms is much larger than the percentage that invests in R&D, which indicates the prevalence of non-R&D, such as ‘doing, using, and interacting’ (DUI), mode of innovation. Second, contrary to findings for the developed economies, the impact of R&D on productivity for the entrants and incumbents does not differ. However, the impact of innovation output – many of which are a result of DUI mode – on productivity is much higher for the entrants. Third, despite the adverse sectoral composition typical of catching-up economies, Estonian incumbents, who are the primary carriers of ‘scientific and technologically-based innovative’ (STI) activities, are as good as German incumbents in translating R&D into productivity gains. Fourth, while embodied technological change through capital accumulation is found to be more effective than R&D for improving productivity, the effectiveness is higher for R&D performing firms. Our results suggest that certain policy recommendations for spurring productivity growth in developed economies may be unsuitable for catching-up economies.
•Productivity impacts of R&D and innovations – mostly due to DUI mode – are estimated.•DUI mode of innovation is more prevalent than the STI mode among Estonian firms.•Entrants reap higher benefits from own innovations than incumbents.•Incumbents reap similar benefits from R&D as incumbents in developed economies.•Growth policies for developed economies may be unsuitable for catching-up countries.
•We developed a typology of 13 main export patterns and 11 sub-patterns.•69% of Estonian exporters reduced or stopped exporting to at least one market.•58% of exporters exported only for 1 year.•True ...born globals and traditional (slow) internationalizers were rare.•Many firms had a low export share and/or a small number of export markets.
As exporting is the most common internationalization form, previous studies have tried categorizing export patterns but without using a full population of a particular country's firms for finding out how often every pattern occurs. We aim to develop a typology of 13 main export patterns and 11 sub-patterns and identify the frequency of each export pattern using detailed firm- and market-level export data for the population of Estonian firms. We conclude that 69% of Estonian exporters (excluding 1st-year exporters) reduced or stopped exporting to at least one market, 58% exported only for 1 year and that true born globals and traditional (slow) internationalizers were rare: many firms started exporting soon after foundation but had a low export share and/or a small number of export markets.
Abstract This paper investigates how investments in automation affect the gender pay gap. The evidence of the effects of automation on the labor market is growing; however, little is known about the ...implications of automation for the gender pay gap. The data used in this paper are from a matched employer–employee dataset incorporating detailed information on firms, their imports, and employee–level data for Estonian manufacturing and service employers for the period of 2006–2018. Through the use of the imports of automation goods as a proxy for the introduction of automation at the firm level, this paper estimates the effect of automation using simple Mincerian wage equations. The causality of the effect is further validated using propensity score matching (PSM). We find that introducing automation enlarges the gender pay gap, and PSM confirms that this also has a higher causal effect on the wages of male employees than female employees. The results imply that a higher representation of women in higher-paid positions does not guarantee a reduction in the gender pay gap in the presence of automation, and appropriate measures in education and retraining are needed to tackle the effect of automation on gender inequality.
Until recently, studies have not reached any general agreement on how a corrupt environment influences foreign investments. Furthermore, far too little attention has so far been paid to how ...corruption relates to the performance of foreign and domestically owned firms. This paper exploits cross-sectional firm-level data from the fifth round of the Business Environment and Enterprise Performance Survey (BEEPS V) for the purpose of investigating how bribery is associated with FDI and firm performance. By using various econometric estimation strategies, we find that foreign owned firms tend to pay larger bribes compared to domestically owned firms, while the negative size of bribe expenses on firm productivity is larger for foreign owned firms than domestically owned firms in highly corrupt countries. This study suggests that developing countries should fight against informal payments in bureaucracy to create corruption free environments, so that multinationals are incentivized to invest in their countries.
We investigate whether labour mobility from foreign-owned firms to local firms in the host economy is associated with an increase in productivity, export product complexity and other export ...indicators of domestic firms. Based on employer-employee level data from Estonia, we confirm that hiring employees with experience from foreign-owned firms is associated with an increase in the total factor productivity (TFP) of the firm and the higher export propensity and breadth of export markets or products. However, on average, these within-firm effects on TFP appear to be not working through increases in the level of the complexity of the export product portfolio of domestically owned firms. One implication of this result is that other channels of upgrading than changes in the Hausmann-Hidalgo export product complexity measure may be more important in this context; for example, such as upgrading the tasks or activities in the global value chain of a product.
PDF
