A Model of Spillovers Through Labor Recruitment

Lawrence Kaufmann

International Economic Journal, 1997, vol. 11, issue 3, 13-33

Abstract: This paper develops a model where spillovers can be generated through domestic firm recruitment of employees at a multinational corporation (MNC) where more advanced technologies are employed. It is shown that both spillover and no-spilover equilibria are possible in the model, depending on the marginal costs and benefits of recruitment. Spillover benefits depend on demand parameters and the technological capabilities of the domestic firm, and spillover costs are determined by the MNC's internal wage. Compared with the no-spillover equilibrium, spillovers lead to fewer technology transfers by the MNC and higher market prices. [031, F23]

Date: 1997
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DOI: 10.1080/10168739700000016

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