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Multinationals do not export jobs, and other related results

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  • Kwok Tong Soo

Abstract

We develop a simple model of multinational firms, in which firms engage in production abroad to take advantage of cheap labour. There are gains from multinational firms beyond the standard gains from trade. The model makes two empirically testable predictions. First, firms with more foreign employment also have more domestic employment; multinationals are not net exporters of jobs. Second, the expansion of multinational activity will increase the overall size of the firm. We find that both predictions hold empirically, using a sample of the largest multinational firms. In addition, the presence of multinational firms raises welfare relative to when they are absent, although the proportional gain is not large.

Suggested Citation

  • Kwok Tong Soo, 2018. "Multinationals do not export jobs, and other related results," Working Papers 244952396, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:244952396
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    More about this item

    Keywords

    Multinational firms; comparative advantage;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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