How Border and Distance Effects Shape the Multinational Wage Premium (im Erscheinen)

Abstract

"The multinational wage premium is well documented across countries. Using a new German dataset, we identify two previously overlooked determinants. First, wages paid by foreign multinationals in German plants increase with the distance between headquarters and the plant location. Second, foreign multinationals headquartered near their German plants pay lower wages than domestic multinationals, implying a negative border effect. We develop a model with plant-specific wages and firms choosing between exporting and foreign production. Distance reduces the attractiveness of exporting, making firms more willing to accept higher wages in more distant foreign locations." (Author's abstract, IAB-Doku) ((en))

Cite article

Egger, H., Jahn, E. & Kreickemeier, U. (2026): How Border and Distance Effects Shape the Multinational Wage Premium (im Erscheinen). In: American Economic Journal. Microeconomics.