The effect of FDI on job security

Sascha O. Becker, Marc Andreas Muendler

Research output: Contribution to journalArticleResearchpeer-review

39 Citations (Scopus)

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.

Original languageEnglish
Article number8
Number of pages45
JournalBE Journal of Economic Analysis and Policy
Volume8
Issue number1
DOIs
Publication statusPublished - 2008
Externally publishedYes

Keywords

  • Demand for labor
  • International investment
  • Linked employer-employee data
  • Multinational enterprises
  • Worker layoffs

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