Using the Benchmark and Annual Surveys of U.S. Direct Investment Abroad collected by the Bureau of Economic Analysis, the authors examine the operations of U.S. multinational corporations (MNCs) in seven manufacturing industries and twenty-two countries over the years 1982-91. They analyze how tariffs, wages, and industrial relations environments influenced U.S. MNCs' decisions about where to locate assets and employment. The results imply that wages and the industrial relations environment were statistically significant determinants of the extent to which MNCs located operations in a particular host country. However, while these factors were important, their impact was much smaller than that of host country market size, which was by far the main determinant of MNC location decisions. Furthermore, the authors find no evidence that tariff reductions increased the share of U.S. MNC activities located abroad. Thus, concerns that tariff reductions may lead to loss of "American jobs" appear to be exaggerated. H ow multinational corporations (MNCs) decide where to locate production has been a subject of considerable interest in recent years. For example, in the debate over the North American Free Trade Agreement (NAFTA), U.S. labor unions and many politicians, as well as some academics, expressed concern that trade liberalization would cause U.S. MNCs to move production facilities from the United States to Mexico, so as to take advantage of lower Mexican wages.1 The basic logic is

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JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. University of Wisconsin Press and The Board of Regents of the University of WisconsinSystem are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Human Resources. ABSTRACTWith data obtained from married professional nurses, estimates are made of their labor supply response to changes in wage rates and in husband's earnings and to the impact of other interhousehold differences. Analysis was conducted for two time periods, and for each we estimated models to generate the probability of labor force participation and the expected amount of time worked, given participation. In contrast to the flow of labor supplied by employed married nurses, we find the participation decision is not dependent on the wage rate. Both dimensions of labor supply are dependent on husband's earnings. The results also provide strong evidence that the supply curve is backward-bending just beyond the range of our observations.

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We examine how U.S. multinational corporations (MNCs) and their Canadian afþliates responded to the substantial bilateral tariff reductions that occurred over the 1983{ 92 period. Using conþdential þrm-level data from the Bureau of Economic Analysis, we focus on the MNCs' allocation of employment and capital across Canada and the United States. We þnd that Canadian afþliate employment and assets were negatively correlated with Canadian tariff rates, a pattern that contradicts the notion that Canadian tariff reductions would lead to a`hollowing out' of Canadian manufacturing. We also þnd evidence of substantial heterogeneity in MNCs' responses to tariff changes, even within narrowly deþned industries. JEL classiþcation: F23, F10 The statistical analysis of þrm-level data on U.S. multinational corporations reported in this study was conducted at the International Investment Division, Bureau of Economic Analysis, U.S. Department of Commerce, under arrangements that maintained legal conþdentiality requirements. Views expressed are those of the authors and do not necessarily re ect those of the Department of Commerce. Suggestions and assistance from William Zeile and Raymond Mataloni are gratefully acknowledged.