Domestic Labour Markets and Foreign Direct Investment

Jan I. Haaland and Ian Wooton ()

No 3989, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study how the labour market and industry uncertainty affect the investment decisions of multinational enterprises (MNEs). In an uncertain business climate, MNEs must take account of the future in deciding where to locate a branch plant. When wages are endogenously determined, both the opportunity cost of labour and redundancy payments influence the MNE?s decision. When countries compete for foreign investment, different national characteristics determine the winners in different industries. Differences in risk may draw MNEs to different locations. Firm-specific bargaining always offers an advantage, as the mix of current and future pay fully reflects the firm?s risk profile.

Keywords: Multinational firms; Investment subsidies; Entry; Exit; Uncertainty (search for similar items in EconPapers)
JEL-codes: D92 F12 F23 (search for similar items in EconPapers)
Date: 2003-07
New Economics Papers: this item is included in nep-ifn and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://cepr.org/publications/DP3989 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Domestic Labor Markets and Foreign Direct Investment* (2007)
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:cpr:ceprdp:3989

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3989

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().