The Impact of Horizontal and Vertical FDI on Labor Demand for Different Skill Groups
Anselm Mattes ()
No 59, IAW Discussion Papers from Institut für Angewandte Wirtschaftsforschung (IAW)
This paper analyzes the determinants and effects of firm-level FDI flows on the basis of German micro-level data. Concering the determinants of FDI, I differentiate between different target regions and motivations for FDI (market seeking/horizontal FDI versus cost reducing/vertical FDI). The main result is that most firms engage in FDI because of market access motives. Further, I focus on the employment effects of direct investment projects abroad. From a theoretical point of view, the effects of FDI flows on labor demand at the rm level are uncertain. Therefore, this paper analyzes this question empirically using theory-based labor demand re- gressions and and an econometric framework based on the generalized method of moments (GMM). As a main result I find that there is no negative effect of firm-level FDI flows on employment. Positive effects seem plausible in many specication. Further, theory and anecdotal evidence suggest that unskilled workers are aected worse than highly or medium-skilled employees. Hence, the analysis distinguishes between different skill groups. Again, I cannot find negative effects of firm-level FDI flows on any skill group.
Keywords: FDI; horizontal FDI; vertical FDI; labor demand; skill gorups; GMM (search for similar items in EconPapers)
JEL-codes: F16 F23 J23 (search for similar items in EconPapers)
Pages: 45 pages
New Economics Papers: this item is included in nep-int and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:iaw:iawdip:59
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