Référence

Rui Silva (London Business School), « Internal Labor Markets and Investment in Conglomerates », Fédération des Banques Françaises Seminar, TSE, 25 mars 2013, 12h30–14h00, salle MF 323.

Résumé

The literature on conglomerates has focused on the misallocation of investments as the cause of the conglomerate discount. I study frictions in the internal labor market as a possible cause of misallocation of investments. Using detailed plant level data, I document wage convergence in conglomerates: workers in low-wage industries collect higher-than-industry wages when the diversified firm is also present in high-wage industries (by 5.2%). I confirm this effect by exploiting a quasi-experiment involving the implementation of NAFTA agreement that exogenously increases worker wages of exporting plants. I track the evolution of wages in non-exporting plants in diversified firms that also own exporting plants and find a significant increase in wages of these plants relative to unaffiliated non-exporting plants after the event. This pattern of wage convergence affects investments. Plants where workers collect higher-than-industry wages, increase the capital labor ratio in response to their higher labor cost - and this response to higher wages is associated with higher investment in some divisions.

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