Essays on Foreign Direct Investment and International Trade

Chapter 1 examines evidence on wage spillovers from workers with experience in foreign multinational enterprises (MNEs) to incumbent workers in domestic firms. Using administrative panel data from Ireland, I examine possible heterogeneity for such spillovers across the wage distribution using quantile regressions. I begin by using existing methodology and find that, once industry-year and region-year dummies are added as control variables, the average wage spillover effect on incumbents from former foreign MNE workers moving to domestic firms disappears. The quantile results suggest that there are positive spillovers for incumbent workers in the top 40 percent of the wage distribution only. This indicates that foreign MNEs increase inequality through spillovers to domestic firms via labour mobility. Chapter 2 examines whether former foreign MNE workers help domestic startup firms succeed. I find evidence consistent with the idea that, as founding workers, former MNE workers positively contribute to startup outcomes. However, this appears conditional on survival. Using an event study approach on Irish administrative data, I do not find evidence that the wages of workers present from startup increase after former MNE workers joins domestic firms. Likewise, there is no differential increase in size for startups joined by former MNE workers and startups that were not yet joined by former MNE workers. The same is true when examining wage outcomes at the worker level, even distinguishing between directors and non-directors, high and low wage workers. Former MNE workers are the highest earners in startups, suggesting that they have a higher ability than their peers. Challenges in adapting to a much less specialised environment and better wage barganing may partly explain why former MNE workers do not appear to help startup firms succeed any more than other workers without this experience. Chapter 3 replicates Poole (2013, Review of Economics and Statistics 2013) using comprehensive Norwegian and Irish register data. Our results largely confirm the evidence documented in Poole for Brazil which suggests that when workers leave multinationals and are rehired at domestic establishments, the wages of their new coworkers who have already been present in the establishment increase. However, unlike suggested in the original article there is little indication that these spillovers differ in a statistically significant way across various dimensions of heterogeneity for any of the three countries. Chapter 4 studies the impact of the Brexit referendum on Irish exporters to the UK. The referendum triggered a sharp devaluation of the pound vis-a-vis the EUR and led to uncertainty about future trade relations between the UK and the EU. Using administrative data on the universe of Irish exporters, we compare exporters with different levels of exposure to the UK market in 2015. Our findings do not point to a significant effect of the referendum on Irish exporters. Over the period 2015-2021, the firms least exposed to the UK but most internationalised otherwise had considerably higher exit rates from exporting to the UK and from the market overall. They also saw greater declines in employment and sales compared to more exposed firms. We do not find significant differences for export volumes to the UK or elsewhere or for average wages. These findings are robust to controlling for firm characteristics.