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The influence of wages and industrial relations environments on the production location decisions of U.S. multinational corporations

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  • Mario F. Bognanno
  • Michael P. Keane
  • Donghoon Yang

Abstract

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. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 58 (2005)
Issue (Month): 2 (January)
Pages: 171-200

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Handle: RePEc:ilr:articl:v:58:y:2005:i:2:p:171-200

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Cited by:
  1. Uwe Jirjahn & Steffen Mueller, 2011. "Nonunion Worker Representation, Foreign Owners and the Performance of Establishments," Research Papers in Economics 2011-03, University of Trier, Department of Economics.
  2. Jirjahn, Uwe & Heywood, John S., 2013. "Variable Pay, Industrial Relations and Foreign Ownership: Evidence from Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79829, Verein für Socialpolitik / German Economic Association.
  3. O'Farrell, Rory, 2012. "The effect of international firm mobility on wages and unemployment," Labour Economics, Elsevier, Elsevier, vol. 19(6), pages 931-943.

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