Margins of Multinational Labor Substitution

Marc-Andreas Muendler and Sascha Becker

No 14776, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Employment at multinational enterprises (MNEs) responds to wages at the extensive margin, when an MNE enters a foreign location, and at the intensive margin, when an MNE operates existing affiliates. We present an MNE model and conditions for parametric and nonparametric identification. Prior studies rarely found wages to affect MNE employment. We document a complementarity bias when the extensive margin is excluded and detect salient labor substitution at both margins for German manufacturing MNEs. With a one-percent increase in home wages, for instance, MNEs add 2,000 jobs in Eastern Europe at the extensive margin and 4,000 jobs overall; a converse one-percent drop in Eastern European wages removes 730 German MNE jobs.

JEL-codes: C14 C24 F21 F23 J23 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-lab
Note: ITI LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Marc-Andreas Muendler & Sascha O. Becker, 2010. "Margins of Multinational Labor Substitution," American Economic Review, American Economic Association, vol. 100(5), pages 1999-2030, December.

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Related works:
Journal Article: Margins of Multinational Labor Substitution (2010)
Working Paper: Margins of Multinational Labor Substitution (2006)
Working Paper: Margins of Multinational Labor Substitution (2006)
Working Paper: Margins of Multinational Labor Substitution (2006)
Working Paper: Margins of Multinational Labor Substitution (2006)
Working Paper: Margins of multinational labor substitution (2006)
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