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Volatile multinationals? Evidence from the labor demand of German firms

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  • Buch, Claudia M.
  • Lipponer, Alexander

Abstract

Does more FDI make the world a riskier place for workers? We analyze whether an increase in multinational firms' activities is associated with an increase in firm-level employment volatility. We use a firm-level dataset for Germany which allows us to distinguish between purely domestic firms, domestic multinationals, their foreign affiliates, and foreign firms that are active in Germany. We decompose the volatility of firms into their reaction and their exposure to aggregate developments. Generally, we find no above-average wage and output elasticities for multinational firms. --

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2007,22.

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Date of creation: 2007
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Handle: RePEc:zbw:bubdp1:6143

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Keywords: Employment volatility; labor demand; multinational firms;

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  1. 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.
  2. Paul R. Bergin & Robert C. Feenstra & Gordon H. Hanson, 2009. "Offshoring and Volatility: Evidence from Mexico's Maquiladora Industry," American Economic Review, American Economic Association, vol. 99(4), pages 1664-71, September.
  3. Steven J. Davis & John Haltiwanger & Ron Jarmin & Javier Miranda, 2006. "Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms," NBER Working Papers 12354, National Bureau of Economic Research, Inc.
  4. Barba Navaretti, Giorgio & Checchi, Daniele & Turrini, Alessandro Antonio, 2003. "Adjusting Labour Demand: Multinational versus National Firms- A Cross-European Analysis," CEPR Discussion Papers 3751, C.E.P.R. Discussion Papers.
  5. Diego A. Comin & Thomas Philippon, 2006. "The Rise in Firm-Level Volatility: Causes and Consequences," NBER Chapters, in: NBER Macroeconomics Annual 2005, Volume 20, pages 167-228 National Bureau of Economic Research, Inc.
  6. David Roodman, 2006. "How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata," Working Papers 103, Center for Global Development.
  7. Cuñat, Alejandro & Melitz, Marc J, 2007. "Volatility, Labour Market Flexibility, and the Pattern of Comparative Advantage," CEPR Discussion Papers 6297, C.E.P.R. Discussion Papers.
  8. James E. Rauch & Vitor Trindade, 2000. "Information and Globalization: Wage Co-Movements, Labor Demand Elasticity, and Conventional Trade Liberalization," NBER Working Papers 7671, National Bureau of Economic Research, Inc.
  9. Holger Görg & Michael Henry & Eric Strobl & Frank Walsh, 2009. "Multinational companies, backward linkages, and labour demand elasticities," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 332-348, February.
  10. Paul Bergin & Robert Feenstra, 2006. "Outsourcing and Volatility," Working Papers 628, University of California, Davis, Department of Economics.
  11. Sascha O. Becker & Marc-Andreas Muendler, 2006. "The Effect of FDI on Job Separation," CESifo Working Paper Series 1864, CESifo Group Munich.
  12. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  13. Thesmar, David & Thoenig, Mathias, 2004. "Financial Market Development and the Rise in Firm Level Uncertainty," CEPR Discussion Papers 4761, C.E.P.R. Discussion Papers.
  14. Strotmann, Harald & Döpke, Jörg & Buch, Claudia M., 2006. "Does trade openness increase firm-level volatility?," Discussion Paper Series 1: Economic Studies 2006,40, Deutsche Bundesbank, Research Centre.
  15. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
  16. Francesca Fabbri & Jonathan E. Haskel & Matthew J. Slaughter, 2003. "Does Nationality Of Ownership Matter For Labor Demands?," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 698-707, 04/05.
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  19. repec:bla:restud:v:74:y:2007:i:1:p:31-66 is not listed on IDEAS
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Citations

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Cited by:
  1. Bohachova, Olga & Boockmann, Bernhard & Buch, Claudia M., 2011. "Labor Demand During the Crisis: What Happened in Germany?," IZA Discussion Papers 6074, Institute for the Study of Labor (IZA).
  2. Claudia M. Buch & Martin Schlotter, 2008. "Regional Origins of Employment Volatility: Evidence from German States," CESifo Working Paper Series 2296, CESifo Group Munich.
  3. Christian Arndt & Claudia M. Buch & Monika E. Schnitzer, 2010. "FDI and Domestic Investment: An Industry-Level View," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 69.
  4. Moser, Christoph & Urban, Dieter M & Weder di Mauro, Beatrice, 2009. "Offshoring, Firm Performance and Establishment-Level Employment: Identifying Productivity and Downsizing Effects," CEPR Discussion Papers 7455, C.E.P.R. Discussion Papers.
  5. Hogrefe, Jan & Yao, Yao, 2012. "Offshoring and labor income risk," ZEW Discussion Papers 12-025, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Jan Hogrefe & Yao Yao, 2012. "Offshoring and Labor Income Risk: An Empirical Investigation," SOEPpapers on Multidisciplinary Panel Data Research 515, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Michaela Fuchs & Udo Brixy, 2011. "How important are plant and regional characteristics for employment dynamics? Plant-level evidence for Germany," ERSA conference papers ersa10p243, European Regional Science Association.
  8. Jung, Sven, 2012. "Employment adjustment in German firms," Discussion Papers 80, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  9. Friebel, Guido & Heinz, Matthias, 2012. "Media Slant Against Foreign Owners: Downsizing," IZA Discussion Papers 6859, Institute for the Study of Labor (IZA).

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