FDI and onshore task composition: evidence from German firms with affiliates in the Czech Republic

Konstantin Koerner () and Mathilde Le Moigne ()
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Konstantin Koerner: Institute for Employment Research
Mathilde Le Moigne: Princeton University

Journal for Labour Market Research, 2023, vol. 57, issue 1, 1-42

Abstract: Abstract How does a firm’s foreign direct investment (FDI) in a low-wage country change its onshore task demand in a high-wage country? Is the shift more intensive for jobs that the literature has designated offshorable? We address these questions using a matched difference-in-differences (DiD) approach with data on German firms that have similar propensities to conduct FDI in the Czech Republic. Our novel matching procedure draws on post-lasso logit estimates and shows that high task intensities of managing, administration, and labor legislation play a major role in firms’ engagement in international expansion. The outcomes of the DiD estimation show that after acquiring a foreign affiliate, multinational enterprises (MNEs) increase the intensities of their activities typical of headquarters such as managing, analyzing, and negotiating relative to the corresponding task intensities among non-MNEs. We also find sector-specific decreases, such as a reduction in typical production tasks (monitoring, producing, measuring) in manufacturing MNEs or typical service tasks (informing, medical, repairing) in service MNEs.

Keywords: FDI; Tasks; Trade; Offshorability; Central and Eastern Europe; Germany (search for similar items in EconPapers)
JEL-codes: F16 F66 J24 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1186/s12651-023-00346-7

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