Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals

Abstract

Multinational enterprises, location choice, multinomial choice, labor demand, translog cost function,

How does investing in cheap labour countries affect performance at home? Firm-level evidence from France and Italy

“…Several earlier empirical works have examined the effects of outward FDI on output (Blonigen, 2001;Head and Ries, 2001;Desai et al, 2005), home employment (Blomström et al, 1997;Riker, 1997a and1997b;Lipsey, 1999;Bruno and Falzoni, 2000;Braconier and Ekholm, 2002;Hanson et al, 2003;Marin, 2004;Becker et al, 2005;Konigs and Murphy, 2006), productivity (Braconier et al, 2001;van Pottelsberghe de la Potterie and Lichtenberg, 2001). They generally find that the effect of FDI is positive or that short term costs get offset in the longer term.…”

Margins of Multinational Labor Substitution

“…b Swedish MNE log wage premia. German and Swedish MNEs exhibit similar labor-demand behavior (Becker et al 2005). totals. Although German manufacturing MNEs employ an estimated 17.5 percent of German manufacturing workers, the MNEs' labor-market power is arguably limited.…”

“…Using foreign growth rates as instruments for FDI, Desai, Foley and Hines (2009) find that foreign and domestic investment expenditures and wage bills are positively associated within MNEs. At the worker level, Becker and Muendler (2008) document more worker retentions at expanding MNEs than at non-expanding MNEs. But those studies do not discern whether foreign MNE expan- 6 Riker and Brainard (1997) report too that affiliate activities in low-income countries are complementary to activities in high-income countries.…”

Cross-Border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany

“…So far, results have not been conclusive. Some studies find a weak substitutability between parent and affiliate employment (Braconier and Ekholm, 2000;Becker, Ekholm, Jäckle, and Muendler, Konings and Murphy, 2006), which is mostly driven by activities in other high-wage countries, while other studies point to a complementary relationship (Brainard and Riker, 1997;Desai, Foley, and Hines, 2009). Aiming to reconcile these contradicting findings, Harrison and McMillan (forthcoming) stress the importance of distinguishing between horizontal and vertical FDI motives.…”