What Are the Pay Equity Implications of Expatriate Compensation?

Identification of effective and cost-efficient compensation practices for recruiting and retaining expatriate employees is becoming increasingly important in today's global labor market. This paper proposes a study to investigate perceptions of fair compensation for expatriate employment using the tenets of equity theory. Participants will specify an "equitable" monetary bonus for hypothetical overseas assignments of different lengths and locations. Relying on Konopaske's and Werner's (2002) propositions, the author predicts the following: 1) Short-term overseas assignments will require a larger "foreign service premium" (monetary bonus) than domestic relocation, 2) Long-term expatriate assignments will require a larger premium than short-term or domestic relocation, and 3) Relocation to a developing country will require a larger premium than relocation to an advanced industrialized nation or to a domestic location. A methodology and data analysis strategy are described.