Direct and indirect impacts of liberal immigration policies on the inflow of multinationals in the U.S

Geiguen Shin

No 2019-42, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Many studies suggest that stringent labor protection and higher labor costs in host countries can limit foreign direct investment. This implies that foreign firms are sensitive to the flexibility of the labor market in the U.S. The U.S. has experienced increasing immigrants, which have preserved the stable labor supply in the U.S. market. The U.S. is a good case to test the relationship between immigration and FDI because the U.S. is not only the largest host and home country of FDI but also the country that has one of the highest immigrant populations and experiences a significant reduction in labor supply and an increase in the minimum cost of labor. Utilizing a time-series analysis from 1970 to 2016, this study suggests that the expansive immigration policies directly increase FDI inflows in the U.S., and indirectly increase FDI inflows throughout lowering potential labor costs and securing a stable labor supply.

Keywords: foreign direct investment; immigration policy; labor cost (search for similar items in EconPapers)
JEL-codes: F16 J15 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-int, nep-lab and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201942

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