Do foreign-owned firms pay more? Evidence from the Indonesian manufacturing sector 1990-99

Multinational Enterprises Programme Working Paper No. 98

In this paper, Ann Harrison and Jason Scorse utilize Indonesian manufacturing census data from 1990 to 1999 to address whether MNEs pay higher wages than comparable domestic enterprises. The Indonesian dataset is particularly interesting as it allows the measurement of the educational attainment of the workers in each plant and the tracking of the same plant over time. Consequently, unlike previous economic studies on the same subject, the authors are able to control for unmeasured quality differences in the composition of the labour force hired by MNEs and other enterprises over a period of time.