Gender wage discrimination and the attractiveness of foreign MNC subsidiaries as employers for women

Summary

This research paper, "Gender wage discrimination and the attractiveness of foreign MNC subsidiaries as employers for women" by Sofka, Grimpe, and Kaiser, explores how women's past experiences with wage discrimination influence their employer preferences, specifically their inclination to join foreign multinational corporation (MNC) subsidiaries. The study posits that prior exposure to wage discrimination in domestic employment can reshape a woman's employer preferences, making foreign MNCs more attractive. This is because foreign MNCs have the potential to circumvent the gender-biased norms prevalent in host countries, thereby turning the typical "liability of foreignness" into a competitive advantage in attracting female talent. To investigate this phenomenon, the authors conducted an empirical study using a comprehensive dataset of 165,624 female professionals and managers who transitioned between jobs in Denmark from 2002 to 2015. A key aspect of their methodology involved leveraging a pay transparency law enacted in Denmark in 2006, which helped in identifying the underlying mechanisms linking wage discrimination experiences to subsequent employer choices. This robust dataset and specific policy context allowed for a detailed analysis of how individual experiences of gender wage disparity impact career decisions. The findings reveal that women who have endured greater wage discrimination in their domestic employment are indeed more prone to accepting positions at foreign MNC subsidiaries. This preference, however, is not uniform across all contexts. The study found that this effect is diminished in labor markets where high-performing domestic employers offer attractive non-wage benefits, such as a strong reputation or enhanced job security, which can somewhat offset the appeal of foreign employers. Conversely, the attractiveness of foreign MNC subsidiaries is significantly amplified when these companies actively signal their commitment to gender fairness, particularly through a higher representation of women in management roles. Overall, the research concludes that wage discrimination plays a crucial role in redirecting female career trajectories, effectively transforming a societal challenge into a strategic advantage for foreign MNCs seeking to attract skilled female labor.