Adjusting Labour Demand: Multinational versus National Firms- A Cross-European Analysis
AbstractThis Paper provides a cross-country perspective to the firm-level analysis of the relation between foreign ownership and labour demand. We estimate labour demand equations in 11 European countries using dynamic panel data techniques on samples that permit to distinguish the ownership status of firms. We find that the employment adjustment is significantly faster in MNEs’ affiliates, irrespective of the country investigated. As for the wage elasticity of labour demand, MNEs show smaller elasticities compared with national firms, and very little variation across countries. Cross-country correlations show that the relative value of wage elasticities in MNEs on that in NEs is positively related to country-level indexes of labour market regulation (employment protection, union presence,...). We interpret the results as follows: MNEs tend to have a more rigid demand for total labour (possibly due to a different skill composition). MNEs being relatively ‘footloose’, however, this difference tends to vanish as the rigidity of employment regulations rises.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3751.
Date of creation: Feb 2003
Date of revision:
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Other versions of this item:
- Giorgio Barba Navaretti & Daniele Checchi & Alessandro Turrini, 2003. "Adjusting Labor Demand: Multinational Versus National Firms: A Cross-European Analysis," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 708-719, 04/05.
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-14 (All new papers)
- NEP-EEC-2003-03-14 (European Economics)
- NEP-LAB-2003-03-14 (Labour Economics)
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