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Home Employment Effects of EU Firms’ Activities in Central and Eastern European Countries

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Author Info

  • Ludo Cuyvers

    ()

  • Michel Dumont

    ()

  • Glenn Rayp

    ()

  • Katrien Stevens

    ()

Abstract

We examine whether or not affiliate production in Central and Eastern Europe (CEEC) affects factor demand in the EU, at the investing firm and sector levels. Using firm level data, we estimate parent labor demand elasticities for a number of manufacturing sectors, following a flexible cost function approach. We find evidence of inter-sector heterogeneity, but not of a substantially greater impact in “low-skilled†intensive sectors. Labor demand in the EU is affected by FDI in the CEEC, both at the investing firm and sector levels. It has a significant sector and non-sector component. Copyright Springer Science + Business Media, Inc. 2005

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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 16 (2005)
Issue (Month): 2 (April)
Pages: 153-174

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Handle: RePEc:kap:openec:v:16:y:2005:i:2:p:153-174

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Web page: http://www.springerlink.com/link.asp?id=100323

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Keywords: employment; investment; multinational firms;

References

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  1. Francesca Di Mauro, 2001. "Economic Integration between the EU and the CEECs: A Sectoral Study," LICOS Discussion Papers 10501, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  2. Giovanni S. F. Bruno & Anna M. Falzoni, 1999. "Multinational Corporations, Wages and Employment: Do Adjustment Costs Matter?," Development Working Papers 130, Centro Studi Luca d\'Agliano, University of Milano.
  3. Blomström, Magnus & Fors, Gunnar & Lipsey, Robert E., 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Working Paper Series in Economics and Finance 200, Stockholm School of Economics.
  4. Jonathan E. Haskel & Matthew J. Slaughter, 2000. "Have Falling Tariffs and Transportation Costs Raised U.S. Wage Inequality?," NBER Working Papers 7539, National Bureau of Economic Research, Inc.
  5. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Scholarly Articles 3445092, Harvard University Department of Economics.
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  7. Claudia M. Buch & Robert M. Kokta & Daniel Piazolo, 2001. "Does the East Get What Would Otherwise Flow to the South? FDI Diversion in Europe," Kiel Working Papers 1061, Kiel Institute for the World Economy.
  8. Paul, Catherine J Morrison & Siegel, Donald S, 2001. " The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(2), pages 241-64, June.
  9. Rodolfo Helg & Riccardo Faini & Anna M. Falzoni & Marzio Galeotti & Alessandro Turrini, 2001. "Importing Jobs And Exporting Firms? On The Wage And Employment Implications Of Italy’S Trade And Foreign Direct Investment Flows," International Trade 0103001, EconWPA.
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  12. Matthew J. Slaughter, 1995. "Multinational Corporations, Outsourcing, and American Wage Divergence," NBER Working Papers 5253, National Bureau of Economic Research, Inc.
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  14. Hatzius, Jan, 1998. " Domestic Jobs and Foreign Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(4), pages 733-46, December.
  15. Blomström, Magnus & Kokko, Ari, 2000. "Outward Investment, Employment and Wages in Swedish Multinationals," CEPR Discussion Papers 2524, C.E.P.R. Discussion Papers.
  16. Irving B. Kravis & Robert E. Lipsey, 1988. "The Effect of Multinational Firms' Operations on Their Domestic Employment," NBER Working Papers 2760, National Bureau of Economic Research, Inc.
  17. Riccardo Faini & Anna M. Falzoni & Marzio Galeotti & Rodolfo Helg & Alessandro Turrini, 1999. "Importing Jobs and Exporting Firms? On the Wage and Employment Implications of Italian Trade and Foreign Direct Investment Flows," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(1), pages 95-135, April.
  18. Brenton, Paul & DiMauro, Francesca & Lücke, Matthias, 1998. "Economic integration and FDI: an empirical analysis of foreign investment in the EU and in Central and Eastern Europe," Kiel Working Papers 890, Kiel Institute for the World Economy.
  19. Berndt, Ernst R. & Hesse, Dieter M., 1986. "Measuring and assessing capacity utilization in the manufacturing sectors of nine oecd countries," European Economic Review, Elsevier, vol. 30(5), pages 961-989, October.
  20. Ludo Cuyvers & Michel Dumont & Glenn Rayp & Katrien Stevens, 2003. "Wage and employment effects in the EU of international trade with the emerging economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(2), pages 248-275, June.
  21. Donald S. Siegel & Catherine J. Morrison Paul, 1999. "Scale Economies and Industry Agglomeration Externalities: A Dynamic Cost Function Approach," American Economic Review, American Economic Association, vol. 89(1), pages 272-290, March.
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Citations

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Cited by:
  1. Cesare Imbriani & Rosanna Pittiglio & Filippo Reganati, 2011. "Outward Foreign Direct Investment and Domestic Performance: the Italian Manufacturing and Services Sectors," Atlantic Economic Journal, International Atlantic Economic Society, vol. 39(4), pages 369-381, December.
  2. Jaan Masso & Urmas Varblane & Priit Vahter, 2007. "The Impact Of Outward Fdi On Home-Country Employment In A Low-Cost Transition Economy," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 52, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  3. Martin Falk & Yvonne Wolfmayr, 2010. "The substitutability between parent company and foreign affiliate employment in Europe," Empirica, Springer, vol. 37(1), pages 87-100, February.
  4. Ludo Cuyvers & Reth Soeng, 2011. "The effects of Belgian outward direct investment in European high-wage and low-wage countries on employment in Belgium," International Journal of Manpower, Emerald Group Publishing, vol. 32(3), pages 300-312, July.

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