This paper examines the relationship between foreign equity participation and average wages at the plant level. The author shows that using a binary measure for foreign ownership, as is the traditional practice in the literature, leads to biased estimates of the foreign ownership wage premium, compared to the use of a continuous measure if the true relationship is linear. Using nonparametric and semi-parametric techniques the author finds this is the case: the relationship between the level of foreign
ownership and average wages is better approximated as linear rather than binary. The author also finds that a ten percentage point increase in foreign equity participation is associated with an approximately 4% increase in the average wage of non-production workers. These results are the first to show that the wage premium due to foreign ownership varies with the level of foreign ownership in a continuous manner.