The Effect of Multinational Firms' Operations on Their Domestic Employment

Irving B. Kravis and Robert Lipsey

No 2760, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Given the level of its production in the U.S., a firm that produces more abroad tends to have fewer employees in the U.S. and to pay slightly higher salaries and wages to them. The most likely explanation seems to be that the larger a firm's foreign production, the greater its ability to allocate the more labor-intensive and less skill-intensive portions of its activity to locations outside the United States. This relationship is stronger among manufacturing firms than among service industry firms, probably because services are less tradable than manufactured goods or components, and service industries may therefore be less able to break up the production process to take advantage of differences in factor prices.

Date: 1988-11
Note: ITI IFM
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Citations: View citations in EconPapers (37)

Published as "Parent Firms and their Foreign Subsidiaries in Goods and Service Indudtries." International trade and Finance Association, 1991, Proceedings, pp. 207-222.

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