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Purpose - The purpose of the study is to examine the wage differential between domestic and foreign-owned firms (MNCs) in Bangladesh using World Bank Enterprise Survey Data. Design/Methodology/Approach - In this study, we employ OLS to investigate the wage premiums. In addition to the OLS method, we use Quantile Regression (QR) to reveal the premium in each quantile of wage distribution for a robustness check. Findings - The foreign-firm premium is large and significantly positive by 49 percent but reduced to nearly half when human capital, firm, and worker differences are considered. However, the remaining 27 percent wage premium of those foreign-owned is still substantial. The premium does not, however, vary monotonically with the status of foreign control. Fully foreign-owned firms were not found to have a significant positive wage premium. In addition, the QR result reveals that the premium is larger for workers at the top of the conditional distributions. This findings means foreign firms may select workers that are more skilled in their unobservable characteristics. Research Implications or Originality - This study is the first attempt to analyze the effects of FDI on wage premiums in Bangladesh, and clearly distinguishes the ownership of the firms as we divide the full sample into four ownership categories.
