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Multinational Companies, Backward Linkages and Labour Demand Elasticities

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Author Info

  • Holger Görg

    (University of Nottingham)

  • Michael Henry

    (Aston University)

  • Eric Strobl

    (Ecole Polytechnique Paris)

  • Frank Walsh

    (University College Dublin)

Abstract

This paper investigates the link between nationality of ownership and wage elasticities of labour demand at the level of the plant. In particular, we examine whether labour demand in multinationals becomes less elastic with respect to the wage if the plant has backward linkages with the local economy. Our empirical evidence, based on a rich plant level dataset, shows that the extent of local linkages indeed reduces the wage elasticity of labour demand. This result is economically important and holds for a number of different specifications.

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File URL: http://www.ucd.ie/economics/research/papers/2006/WP06.28.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200628.

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Length: 34 pages
Date of creation: 15 Dec 2006
Date of revision:
Handle: RePEc:ucn:wpaper:200628

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Keywords: labour demand; elasticities; linkages; multinational companies;

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References

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  1. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
  2. Holger Görg & Frances Ruane, 2000. "An Analysis of Backward Linkages in the Irish Electronics Sector," The Economic and Social Review, Economic and Social Studies, vol. 31(3), pages 215-235.
  3. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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Citations

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Cited by:
  1. Buch, Claudia M. & Lipponer, Alexander, 2010. "Volatile multinationals? Evidence from the labor demand of German firms," Labour Economics, Elsevier, vol. 17(2), pages 345-353, April.
  2. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2013. "Exporting and Labor Demand: Micro-Level Evidence from Germany," IZA Discussion Papers 7494, Institute for the Study of Labor (IZA).
  3. Katariina Nilsson Hakkala & Fredrik Heyman & Fredrik Sjöholm, 2010. "Multinationals, skills, and wage elasticities," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(2), pages 263-280, June.
  4. Jaanika Meriküll & Tairi Rõõm, . "Are foreign-owned firms different ? Comparision of employment volatility and elasticity of labour demand," Bank of Estonia Working Papers wp2014-1, Bank of Estonia.
  5. Alexander Hijzen & Paul Swaim, . "Offshoring, Labour Market Institutions and the Elasticity of Labour Demand," Discussion Papers 08/05, University of Nottingham, GEP.
  6. Godart, Olivier & Görg, Holger & Greenaway, David, 2012. "Domestic Multinationals, Foreign Affiliates, and Labour Demand Elasticities," IZA Discussion Papers 7061, Institute for the Study of Labor (IZA).
  7. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics.
  8. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2014. "The Own-Wage Elasticity of Labor Demand: A Meta-Regression Analysis," IZA Discussion Papers 7958, Institute for the Study of Labor (IZA).
  9. Patrick Paul Walsh & Ciara Whelan, 2011. "Mr Whitaker and Industry: Setting the Record Straight–A Reply to Barry and Daly," The Economic and Social Review, Economic and Social Studies, vol. 42(2), pages 169–175.

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