FDI and the task content of domestic employment for U.S. multinationals

Alexis Grimm and Mina Kim

No 286, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: Using a unique dataset, we examine how the foreign direct investment activities of U.S. multinational manufacturers are related to the composition of their domestic employment. The analysis is based on a dataset in which Bureau of Economic Analysis (BEA) firm-level data on the foreign operations of U.S. multinationals are matched with Bureau of Labor Statistics (BLS) establishment-level data on occupation and wage distributions. The main implication of our findings is that foreign direct investment is generally positively correlated with domestic labor demand, with automated/routine tasks representing an important exception. For firms that export a significant amount to their foreign affiliates for further processing, foreign labor in low-income countries appears to substitute for domestic labor in automated/routine tasks. Our results show that these firms tend to be younger and smaller. They do not seem to be more engaged in innovative activity at home compared to other multinational manufacturers in our sample.

JEL-codes: F16 F23 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2016-09-01
New Economics Papers: this item is included in nep-int
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Working Paper: FDI and the Task Content of Domestic Employment for U.S. Multinationals (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:286

DOI: 10.24149/gwp286

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