Can You Take Your Corporate culture With You? Multinational Companies and the Gender Wage Gap in Germany

Abstract

Multinational companies (MNCs) are an important part of the economy and thus for the labor market. However, their impact on various dimensions of inequality remains unclear. The author analyzes whether MNCs influence gender wage inequalities in their host countries. MNCs might transfer their home countries’ cultures by taking their beliefs, practices, and resulting gender inequalities with them into subsidiaries abroad. Company fixed-effects regressions using unique German linked company employee data show that lower gender inequalities in MNCs’ home countries are associated with a lower gender wage gap in Germany. This association is especially strong for MNCs with expatriate managers from the same home country and accounts for 10 percent of the unexplained gender wage gap. These results strongly support the transfer-of-culture hypothesis and shed light on expatriate managers as an underlying mechanism for this transfer of culture.