The Impact of Foreign Acquisitions on Wages

We study the effects of foreign takeovers on firm performance, skill premium and compensation practices following Finland’s deregulation of foreign ownership in the mid-1990s. We find large effects on wages at the industry and local labor-market level with an identification strategy using foreign ownership patterns in Sweden to instrument acquisitions in Finland. We find more modest increases in wages at firm-level using event-studies. The comparison of labor-market and firm-level results suggests that foreign ownership has spillover effects to firms remaining domestically-owned.