Labor Market Flexibility as a Determinant of FDI Inflows

Hazel Parcon
Additional contact information
Hazel Parcon: Department of Economics, University of Hawaii at Manoa

No 200807, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper shows that labor market flexibility, measured by labor market standards and regulations, has two opposing effects on FDI inflows. Labor market regulations and standards decrease FDI inflows through the cost channel, but they increase FDI inflows through the productivity channel. Allowing for a non-linear relationship between different indicators of labor market flexibility and FDI inflows revealed that some degree of labor market standards and regulations may be attractive for foreign investors. Results strongly suggest that foreign investments to and from different countries and in different sectors are affected differently by different aspects of labor market standards and regulations.

Keywords: foreign direct investment; labor market flexibility (search for similar items in EconPapers)
JEL-codes: F16 F21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2008-10-01
View list of references

Downloads: (external link)
http://www.economics.hawaii.edu/research/workingpapers/WP_08-7.pdf First version, 2008 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hai:wpaper:200807

Ordering information: This working paper can be ordered from
http://www.economics ... s/workingpapers.html

Access Statistics for this paper

More papers in Working Papers from University of Hawaii at Manoa, Department of Economics
Contact information at EDIRC.
Series data maintained by Web Technician ().