8 Before turning to an empirical test of the link between FDI and insecurity,we note one other important aspect of MNEs and labor markets.Many studies across a variety of countries have documented that establishments owned by MNEs pay higher wages than do domestically owned establishments.This is true even controlling for a wide range of observable worker and/or plant characteristics such as industry,region,and overall size.The magnitudes involved are usually quite big3 This multinational wage premium may reflect several forces.It could be accounted for by higher worker productivity due to superior technology and/or capital;or by higher worker productivity due to unobservable worker qualities;or by greater profits and therefore more rent sharing with workers.Our theory framework suggests another possibility:that MNEs pay more to compensate workers for the greater labor-market volatility associated with MNEs. Regardless of the cause(s)of the multinational wage premium,its existence is important for considering how the globalization of production affects economic insecurity.All else equal,this premium likely makes multinational employees feel more secure.Our focus on elasticities and labor-market volatility highlights MNE influences on different dimensions of the overall worker- firm relationship.These contrasting issues of labor-demand elasticities and wage premia suggest that the net impact of MNEs on worker insecurity is ex ante unclear.Whether wage premia fully compensate for increased risks from higher elasticities is an empirical question. 3 Doms and Jensen(1998)document that for U.S.manufacturing plants in 1987,multinational wages exceeded domestically owned wages by a range of 5%-15%,with larger differentials for production workers rather than non-production workers.Griffith (1999)presents similar evidence for the United Kingdom;Globerman,et al (1994)for Canada;Aitken et al (1996)for Mexico and Venezuela;and Te Velde and Morrissey(2001)for five African countries8 Before turning to an empirical test of the link between FDI and insecurity, we note one other important aspect of MNEs and labor markets. Many studies across a variety of countries have documented that establishments owned by MNEs pay higher wages than do domestically owned establishments. This is true even controlling for a wide range of observable worker and/or plant characteristics such as industry, region, and overall size. The magnitudes involved are usually quite big.3 This multinational wage premium may reflect several forces. It could be accounted for by higher worker productivity due to superior technology and/or capital; or by higher worker productivity due to unobservable worker qualities; or by greater profits and therefore more rent sharing with workers. Our theory framework suggests another possibility: that MNEs pay more to compensate workers for the greater labor-market volatility associated with MNEs. Regardless of the cause(s) of the multinational wage premium, its existence is important for considering how the globalization of production affects economic insecurity. All else equal, this premium likely makes multinational employees feel more secure. Our focus on elasticities and labor-market volatility highlights MNE influences on different dimensions of the overall worker￾firm relationship. These contrasting issues of labor-demand elasticities and wage premia suggest that the net impact of MNEs on worker insecurity is ex ante unclear. Whether wage premia fully compensate for increased risks from higher elasticities is an empirical question. 3 Doms and Jensen (1998) document that for U.S. manufacturing plants in 1987, multinational wages exceeded domestically owned wages by a range of 5%-15%, with larger differentials for production workers rather than non-production workers. Griffith (1999) presents similar evidence for the United Kingdom; Globerman, et al (1994) for Canada; Aitken et al (1996) for Mexico and Venezuela; and Te Velde and Morrissey (2001) for five African countries