The Effect of FDI on Job Security

Sascha O. Becker and Marc-Andreas Muendler
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Sascha O. Becker: Ludwig-Maximilians-University Munich
Marc-Andreas Muendler: University of California, San Diego

The B.E. Journal of Economic Analysis & Policy, 2008, vol. 8, issue 1

Abstract: Novel linked employer-employee data for multinational enterprises and their global workforces show that multinational enterprises that expand abroad retain more domestic jobs than competitors without foreign expansions. Propensity-score estimation demonstrates that the foreign expansion itself is a dominant explanatory factor for reduced worker separation rates. Bounding, concomitant variable tests, and further robustness checks show competing hypotheses to be less plausible. The finding is consistent with the hypothesis that, given global wage differences, a prevention of enterprises from outward FDI would lead to more domestic job losses. FDI raises domestic-worker retention more pronouncedly among highly educated workers.

Keywords: multinational enterprises; international investment; demand for labor; worker layoffs; linked employer-employee data (search for similar items in EconPapers)
JEL-codes: F21 F23 J23 J63 (search for similar items in EconPapers)
Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:bpj:bejeap:v:8:y:2008:i:1:n:8

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