Economics in a picture
Managers in internationally active firms have higher and fast growing wages
Understanding why certain jobs are better than others and what implications they have for workers’ career is an important question but difficult to assess. The positive effect that a job has on lifetime wage income may be due to a static effect (i.e. a wage jump upon taking the job) or to a dynamic effect (i.e. faster wage growth after taking the job). Moreover, the benefits of a job, be they static or dynamic, may be “portable” or may be lost when moving to another job.
Using 16 years of Portuguese data on firms, workers, and international trade, it is found that the distinction between internationally active firms and domestic firms is a meaningful empirical dividing line between the corresponding managers. Internationally active firms provide better experience and opportunities for managers as reflected in steeper sales growth for the firms and steeper wage growth for the managers. Why do managers thrive in internationally active firms? The analysis suggests that internationally active firms allow managers to accumulate and use skills that are crucial for their lifetime success. At the same time, firms grow more if employing managers with more experience and in particular more international experience.
For more details see Mion, Opromolla and Ottaviano (2020), “Dream Jobs”, Banco de Portugal Working Paper 12.
Prepared by Giordano Mion, Luca David Opromolla and Gianmarco I.P. Ottaviano. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.
If you want to receive an e-mail whenever a new “Economics in a picture” is published send your request to firstname.lastname@example.org.