Why multinational jobs pay off over the long run

Even though multinational employees are not primarily paid more in cash, they found that they do gain more learning opportunities, experience and training that translate into higher wages down the line. These findings are presented in the paper “Careers in Multinational Enterprises”, authored by Gerritse, Karreman and Roesch, and published in the Journal of International Economics.  

A puzzling career choice 

The study was motivated by a discrepancy the researchers observed among their own graduates. ‘What surprised us,’ Gerritse explains, ‘is that many of our graduates really want to work for a multinational like Deloitte, Rabobank or Unilever, even though they do not necessarily earn more there at the start.’ Understanding why this trade-off between higher starting wages and gaining job experience is attractive, and what it implies for careers over time, became the central question of the research. 

The answer turns out to matter well beyond individual career choices. When the experience effects generated by multinational employment are removed from the Dutch labour market, aggregate labour income falls by about 6 per cent. Given that roughly one in three Dutch workers is employed by a multinational, even small long-term career effects can accumulate to a substantial impact. In a small, open economy like the Netherlands, where multinationals are few but large, this makes their role in shaping careers particularly important for understanding how local labour markets respond to globalisation. 

Benefits for the economy as a whole 

The findings are also relevant for municipalities and policymakers seeking to attract multinational firms. Policy debates often focus on tax incentives and the assumption that multinationals bring high-paying jobs to local economies. The study seems to confirm these assumptions. Importantly, wage benefits do not remain confined to multinationals themselves; workers who move on from these firms earn higher wages at their next domestic employers as well. 

A large data set 

To analyse these career effects, the researchers used comprehensive Dutch employer–employee data covering the period from 2006 to 2021. This allowed them to follow workers from their entry into the labour market for up to 15 or 16 years, observing how wages developed as individuals moved between firms. 

A central challenge was disentangling the value of working at a multinational from workers’ own qualities: better workers might be more likely to find job opportunities in multinationals. To address this, the authors followed workers across different firms and examined cases where workers did not move towards a new opportunity, but had to move because their previous firm started a mass layoff or closed altogether.  

Paid in experience rather than wages 

The results reveal a distinctive career pattern. Graduates who start at multinationals typically earn less at the start, but their wages tend to overtake domestic wages after around three years. After a decade, workers with multinational experience earn up to 14% more than those who spent their entire careers at domestic firms.  

Crucially, this wage premium is not the result of multinationals paying more than a domestic firm for a similar worker. The premium arises with job experience. Once workers’ accumulated experience is taken into account, there is no systematic pay difference between multinational and domestic firms. As Gerritse puts it, ‘what distinguishes multinationals is their ability to add valuable experience to workers, almost like a school.’ That experience is recognised across the labour market, with domestic firms also paying higher wages to employees who have previously worked at a multinational. 

Multinationals organise strategically, in line with the ability to pay young workers lower wages. They hire many young workers at relatively low wages but are more selective in who they promote. Those who remain and advance within the firm earn substantially more, while those who leave continue to benefit from their experience elsewhere. Even after moving to domestic firms, former multinational employees can earn wage premiums of up to 11%, depending on how long they worked at the multinational. These benefits are strongest for workers who already show good performance; for others, the long-term gains are much smaller. 

The study reframes how wage differences between multinational and domestic firms should be interpreted. Rather than reflecting higher pay at the firm level, they point to experience as a central, and portable, component of workers’ earning potential.