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Heiwai Tang, PAPF Speaker Series

Assistant Professor of International Economics
School of Advanced International Studies
Johns Hopkins University

Do Multinationals Transfer Culture? Evidence on Female Employment in China

Abstract: This paper studies cross-country transfers of culture by multinational firms as revealed by gender norms in the labor market. Using panel data of Chinese manufacturing firms over the period 2004-2007, we find that foreign affiliates whose home countries' culture is more equal with regards to women tend to hire proportionately more women and are more likely to appoint female managers. Foreign affiliates, especially those from countries with a more pro-women culture, also generate cultural spillovers to domestic firms, as revealed by a positive correlation between domestic firms' female employment shares and the prevalence of foreign direct investment (FDI) across industries or cities. To quantitatively analyze the productivity loss due to gender inequality, the mechanism of cultural spillover, and its associated productivity gains, we build a parsimonious multi-sector task-based model that features firm heterogeneity in productivity and biases towards female workers, as well as women possessing a comparative advantage in skill rather than physically-intensive tasks. We then confront several model predictions using the firm data. Consistent with the model's predictions, we find evidence that domestic firms respond to increased FDI by hiring more women due to imitation and increased competition. Such cultural spillover is stronger in sectors in which women have a comparative advantage and among the less productive firms. Firms that increase the share of female workers become more profitable. Aggregate output gain due to a reduction in gender inequality induced by FDI is large. Bio

Friday September 23, 2016 12:00 PM
Friday September 23, 2016 01:30 PM
SPEA Room 277
Alex Hollingsworth
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