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Contents Introduction

This paper analyzes wage differentials between local plants and MNC plants in the Thai manufacturing sector at each industry level, focus ing on the different effects of capital types (machinery capital and office equipment capital) and trade status on wages between local plants and MNC plants. First, this paper finds that the existence of positive wage differentials tend to be conspic uous in the plant groups with small machinery capital share and in the less exporting plant groups. However, the wage differentials tend to disappear in the plant groups with large machinery capital share and the more exporting plant groups. Then, the existence of wage differentials is associated with plant-specific effects rather than industry-specific effects. Second, this paper finds that the effects of capital types and trade on wage levels are different between the local plant group and the MNC plant group. Third, combined with those two findings, positive wage differentials disappear in the plant groups with large machinery capital share because MNC plants with large machinery capital share tend to pay lower wages. The positive wage differentials also disappear with the more exporting plant groups partly because more exporting local plants tend to pay higher wages, or partly because more exporting MNC plants tend to pay lower wages.