PUBLICATIONS & REPORTS

Contents Introduction

This paper analyzes two dimensions of wage differentials between plants belonging to foreign multinational corporations (MNCs) and plants belonging to local firms in the Thai manufacturing sector in 1996 and 1998. Wages for local plants are compared with their MNC counterparts disaggregated by foreign ownership share (wholly-foreign plants, majority-foreign plants, and minority-foreign plants), and by nationality (Europe and the United States, Japan, Asia’s Newly Industrialized Economies or NIEs, and other countries). From the regression results, the paper first finds evidence of positive wage differentials among MNC plants and local plants for both non-production and production workers after controlling for other plant characteristics. The magnitude of wage differentials is larger for non-production workers than for production workers. Second, the paper finds evidence of positive wage differentials between majority- and minority-foreign MNC plants and local plants. However, a wage differential between wholly-foreign MNC plants and local plants is smaller and less significant than for MNC plants with less foreign ownership share. Third, wage differentials between local plants and plants owned by MNCs from Japan, and European countries or the U.S. are very large, but wage differentials between local plants and plants owned by MNCs from the Asian NIEs countries are less than half the size of differentials between local plants and plants owned by MNCs from developed countries.