The effects of internationalisation on domestic labour demand by skills : Firm-level evidence for Belgium
AbstractWe empirically investigate the effects of the internationalisation of Belgian firms on domestic demand for production and non-production workers, which are used as proxies for unskilled and skilled labour. Distinction is made between home-employment effects of firms’ internationalisation, through either international trade or outward foreign direct investment, in highincome countries and in low-income economies. The results of our econometric analysis, using data over 1997-2007, suggest that increasing import shares from low-income countries or investing in those countries significantly reduces demand for low-skilled labour, while it increases demand for skilled labour. An increase in exports generally raises the demand for production workers, while it reduces the demand for non-production workers. However, these effects are reversed in the case of exports to low-income countries. Considering the impact of FDI, our results tentatively suggest that the setting up of a new international investment project has a positive impact on demand for non-production workers one period before it is made. This positive effect is offset in the long run, particularly in the case of investment in low-income countries.
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Bibliographic InfoPaper provided by National Bank of Belgium in its series Working Paper Research with number 206.
Length: 30 pages
Date of creation: Oct 2010
Date of revision:
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labour demand; international trade; outward FDI; skilled and unskilled labour;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-30 (All new papers)
- NEP-EUR-2010-10-30 (Microeconomic European Issues)
- NEP-INT-2010-10-30 (International Trade)
- NEP-LAB-2010-10-30 (Labour Economics)
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