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The Effect of FDI on Job Separation

Author

Listed:
  • Sascha Becker
  • Marc-Andreas Muendler
  • Sascha O. Becker
Abstract
A novel linked employer-employee data set documents that expanding multinational enterprises retain more domestic jobs than competitors without foreign expansions. In contrast to prior research, a propensity score estimator allows enterprise performance to vary with foreign direct investment (FDI) and shows that the foreign expansion itself is the dominant explanatory factor for reduced worker separation rates. Bounding, concomitant variable tests, and robustness checks rule out competing hypotheses. The finding is consistent with the idea that, given global factor price differences, a prevention of enterprises from outward FDI would lead to more domestic worker separations. FDI raises domestic-worker retention more pronouncedly among highly educated workers and for expansions into distant locations.

Suggested Citation

  • Sascha Becker & Marc-Andreas Muendler & Sascha O. Becker, 2006. "The Effect of FDI on Job Separation," CESifo Working Paper Series 1864, CESifo.
    • Handle: RePEc:ces:ceswps:_1864
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    References listed on IDEAS

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    Cited by:

    1. Wilhelm Kohler & Christian Arndt & Anselm Mattes & Michael Knogler & Fidelis Lankes & Jarko Fidmuc, 2007. "Die neuen Mitglieder: Motor oder Bremse der europäischen Integration?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 60(14), pages 03-20, July.
    2. Marc-Andreas Muendler & Sascha O. Becker, 2010. "Margins of Multinational Labor Substitution," American Economic Review, American Economic Association, vol. 100(5), pages 1999-2030, December.
    3. Buch, Claudia M. & Lipponer, Alexander, 2010. "Volatile multinationals? Evidence from the labor demand of German firms," Labour Economics, Elsevier, vol. 17(2), pages 345-353, April.
    4. Stiebale, Joel, 2012. "Cross-Border M&A and Innovative Activity: Firm-Level Evidence," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62027, Verein für Socialpolitik / German Economic Association.
    5. Addison, John T. & Bellmann, Lutz & Pahnke, André & Teixeira, Paulino, 2011. "A research note on the determinants and consequences of outsourcing using German data," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(3), pages 231-244.
    6. Addison, John T. & Bellmann, Lutz & Pahnke, André & Teixeira, Paulino, 2011. "A research note on the determinants and consequences of outsourcing using German data," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(3), pages 231-244.
    7. Christian Arndt & Anselm Mattes, 2008. "Mikroökonomische Determinanten und Effekte von FDI am Beispiel Baden-Württemberg," IAW Discussion Papers 43, Institut für Angewandte Wirtschaftsforschung (IAW).
    8. Sebastian Hügelschäffer & Daniel Kromer & Alexander Lipponer, 2009. "Die deutsche Statistik über Direktinvestitionen: Neuerungen und wissenschaftliche Nutzung," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 3(3), pages 157-167, November.
    9. Olga Bohachova & Bernhard Boockmann & Claudia M. Buch, 2011. "Labor Demand During the Crisis: What Happened in Germany?," CESifo Working Paper Series 3625, CESifo.
    10. repec:bla:germec:v:11:y:2010:i::p:188-207 is not listed on IDEAS
    11. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
    12. Driffield, Nigel & Pereira, Vijay & Temouri, Yama, 2019. "Does offshore outsourcing impact home employment? Evidence from service multinationals," Journal of Business Research, Elsevier, vol. 103(C), pages 448-459.

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    More about this item

    Keywords

    multinational enterprises; international investment; demand for labor; worker layoffs; linked employer-employee data;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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