abstract

Novel linked employer-employee data for multinational enterprises and their global workforces show that multinational enterprises that expand abroad retain more domestic jobs than competitors without foreign expansions. Propensity-score estimation demonstrates that the foreign expansion itself is a dominant explanatory factor for reduced worker separation rates. Bounding, concomitant variable tests, and further robustness checks show competing hypotheses to be less plausible. The finding is consistent with the hypothesis that, given global wage differences, a prevention of enterprises from outward FDI would lead to more domestic job losses. FDI raises domestic-worker retention more pronouncedly among highly educated workers.

keywords: Multinational enterprises; international investment; demand for labor; worker layoffs; linked employer-employee data

jel: F21, F23, J23, J63

B.E. Journal of Economic Analysis & Policy: Advances 2008, 8(1): Article 8 [b.e. press html]

background

• supporting files
  • main tables and additional tables [pdf 146k]
• replication: stata 9.1 code
  • self-extracting file (maintaining directory structure) [zip 32k] (11/11/2006)
  • code is documented in, and self-executable on the original data through, the master program %OrderOfPrograms.do
• data
  • midi [pdf 258k] (descriptive statistics, in german [pdf 921k])
• cesifo working paper [1864] version
• bundesbank working paper [2007-01] version