Do multinationals transfer culture? Evidence on female employment in China

We study the global diffusion of culture through multinationals, focusing on gender norms. Using data on manufacturing firms in China from 2004 to 2007, we find that foreign affiliates from countries with a more gender-equal culture tend to employ proportionally more women and appoint more female managers. They also generate cultural spillovers, as we find that domestic firms' female labor share increases with the prevalence of foreign affiliates in the same industry or city. Based on a multi-sector model that accounts for firm heterogeneity in productivity, gender bias, and learning, we perform counterfactual exercises. By hypothetically eliminating firms' gender biases, we observe a 5% increase in China's aggregate total factor productivity, 19% of which is due to spillovers from foreign affiliates. • We examine the global diffusion of gender culture through foreign-invested firms. • We develop a theoretical model that features firm heterogeneity in productivity, gender bias, and learning. • We find empirical evidence from Chinese firms that verify our theoretical predictions about cultural transfer within multinational firms' networks and cultural spillover to local companies. • We quantify the aggregate TFP loss due to discrimination against women in China.