MNC subsidiary closures: What is the value of employees’ human capital in new jobs&quest

Wolfgang Sofka, Miguel Torres Preto and Pedro de Faria
Additional contact information
Miguel Torres Preto: School of Economics, University of Coimbra and IN+, Center for Innovation, Technology and Policy Research, Lisbon, Portugal

Journal of International Business Studies, 2014, vol. 45, issue 6, 723-750

Abstract: We investigate the consequences of MNC subsidiary closures for employees who lose their jobs. In particular, we examine the extent to which the human capital that these employees acquired while employed by the MNC influences the wages they receive in their new jobs. We propose an employee displacement model for foreign MNC subsidiaries that integrates insights from the labor economics and international business literatures. We argue that a new employer will pay higher wages when signals indicate that potential employees have valuable, foreign human capital (e.g., the closed subsidiary was highly productive by host-country standards), and lower wages when signals indicate that potential employees have highly MNC-specific human capital (e.g., the employee had a long tenure in the closed subsidiary). We provide empirical evidence based on a sample of 110,133 displaced employees of closed MNC subsidiaries in Portugal. Our data set spans the period from 2005 to 2009. Showing that MNCs create a valuable pool of human capital for host-country firms when they close subsidiaries, our findings have important implications for research and practice.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v45/n6/pdf/jibs201417a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v45/n6/full/jibs201417a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:pal:jintbs:v:45:y:2014:i:6:p:723-750

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().