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Multinationals, intra‐firm trade and employment volatility

Author

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  • Kozo Kiyota
  • Toshiyuki Matsuura
  • Yoshio Higuchi
Abstract
This paper examines the theoretically ambiguous relationship between the volatility of employment growth and the foreign exposure of firms. We employ unique Japanese firm‐level data during the period of 1994 to 2012. This allows us to investigate any differences in this relationship across multinational firms and trading and non‐trading firms, manufacturing and wholesale trade and intra‐firm and inter‐firm trade. One major finding is that, in manufacturing, employment volatility increases as the share of intra‐firm exports to total sales increases. In contrast, in wholesale trade, employment volatility declines as the share of intra‐firm imports to total imports increases. One possible interpretation of these results is that the transmission of foreign supply and demand shocks could be through not only manufacturing but also wholesale trade firms. Further, a higher share of intra‐firm trade could magnify foreign demand shocks in manufacturing and could mitigate foreign supply shocks in wholesale trade. Résumé Multinationales, commerce intra‐entreprise et volatilité de l’emploi. Cet article analyse le rapport en théorie ambigu entre la volatilité de la croissance de l’emploi et l’exposition des entreprises à l’étranger. Grâce à des données spécifiques recueillies au niveau des entreprises japonaises entre 1994 et 2012, nous pouvons étudier les différences relatives à cette relation pour les entreprises multinationales et les entreprises commerciales et non‐commerciales, le commerce manufacturier et le commerce de gros ainsi que le commerce intra‐entreprise et le commerce inter‐entreprise. L’une des conclusions majeures est que dans le secteur manufacturier, la volatilité de l’emploi diminue à mesure que la part des exportations intra‐entreprise augmente par rapport aux ventes totales. À l’inverse, dans le commerce de gros, la volatilité de l’emploi diminue à mesure que la part des importations intra‐entreprise augmente par rapport aux importations totales. L’une des interprétations possibles de ces résultats est que la transmission des chocs en matière d’offre et de demande étrangère ne passe pas uniquement par les entreprises du secteur manufacturier, mais également par les entreprises du commerce de gros. En outre, une plus grande part de commerce intra‐entreprise pourrait amplifier les chocs en matière de demande étrangère dans le secteur manufacturier, et pourrait atténuer les chocs en matière d’offre étrangère pour le commerce de gros.

Suggested Citation

  • Kozo Kiyota & Toshiyuki Matsuura & Yoshio Higuchi, 2020. "Multinationals, intra‐firm trade and employment volatility," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 982-1015, August.
    • Handle: RePEc:wly:canjec:v:53:y:2020:i:3:p:982-1015
    DOI: 10.1111/caje.12452
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    References listed on IDEAS

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    Cited by:

    1. Minjung Kim, 2022. "Trade and employment volatility of firms during the global financial crisis and post-crisis," Empirical Economics, Springer, vol. 62(5), pages 2091-2109, May.

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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