Do firms or workers drive the foreign acquisition wage premium?

We decompose the wage premium after foreign acquisitions of Dutch domestic firms into the constituent firm- and worker-level premia. Firm-level premia grow up to 3.5%, accounting for the majority of the acquisition premium. Worker-level premia by contrast, grow up to 1% and only materialize with delay, as the acquired firms hire workers with higher earnings capacity than domestic firms. Within firms, premia are also higher for workers with a relatively high earnings capacity. Though industry variation and firm size class heterogeneity is considerable, the dominance of firm-level premia suggests that foreign acquisitions change firms beyond a workforce reshuffling.