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Multinationals, skills, and wage elasticities

[journal article]

Nilsson Hakkala, Katariina; Heyman, Fredrik; Sjöholm, Fredrik

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Abstract The increase in foreign direct investments raises concerns about labor market consequences in many countries. It is feared that multinational firms are inclined to shift jobs abroad and increase job volatility. We use firm-level data to examine if multinationality and foreign ownership affect the wage elasticity of labor demand. Unlike previous studies, we distinguish the effect on different skill groups of employees. We find no general difference in wage elasticity between foreign and domestic firms but the wage elasticity is higher in multinational firms than in national firms, in particular for medium-skilled workers.
Keywords labor demand; direct investment; foreign investment; multinational corporations; wage; flexibility
Classification Labor Market Research; Economics
Free Keywords FDI; Cross-border acquisitions; Multinational enterprises; Foreign ownership; Labor demand; Skill groups; JEL classification: J23; F16; F21; F23
Document language English
Publication Year 2010
Page/Pages p. 263-280
Journal Review of World Economics, 146 (2010) 2
DOI http://dx.doi.org/10.1007/s10290-009-0047-9
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)