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The effects of internationalisation on domestic labour demand by skills : Firm-level evidence for Belgium

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Author Info

  • Ludo Cuyvers

    ()
    (University of Antwerp
    North-West University (Potchefstroom Campus), South Africa)

  • Emmanuel Dhyne

    (National Bank of Belgium, Research Department
    Université de Mons, Centre de recherche Warocqué)

  • Reth Soeng

    ()
    (University of Antwerp, Steunpunt Buitenlands Beleid)

Abstract

We 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 Info

Paper provided by National Bank of Belgium in its series Working Paper Research with number 206.

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Length: 30 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:nbb:reswpp:201010-206

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Keywords: labour demand; international trade; outward FDI; skilled and unskilled labour;

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