IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v17y2010i2p345-353.html
   My bibliography  Save this article

Volatile multinationals? Evidence from the labor demand of German firms

Author

Listed:
  • 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, exporters, domestic multinationals and foreign multinationals. Employment in multinationals could be more volatile than employment in domestic firms if multinationals were facing more volatile demand or if they react more to aggregate developments. We therefore decompose the labor demand of firms into their reaction and their exposure to aggregate developments. We find no above-average wage and output elasticities for multinational firms.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:labeco:v:17:y:2010:i:2:p:345-353
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927-5371(09)00070-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steven J. Davis & John Haltiwanger & Ron Jarmin & Javier Miranda, 2007. "Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms," NBER Chapters, in: NBER Macroeconomics Annual 2006, Volume 21, pages 107-180, National Bureau of Economic Research, Inc.
    2. 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.
    3. Alejandro Cuñat & Marc J. Melitz, 2012. "Volatility, Labor Market Flexibility, And The Pattern Of Comparative Advantage," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 225-254, April.
    4. Muendler, Marc A & Becker, Sascha O., 2006. "The Effect of FDI on Job Separation," University of California at San Diego, Economics Working Paper Series qt28h3p82z, Department of Economics, UC San Diego.
    5. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
    6. 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.
    7. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    8. Paul R. Bergin & Robert C. Feenstra & Gordon H. Hanson, 2017. "Offshoring and Volatility: Evidence from Mexico’s Maquiladora Industry," World Scientific Book Chapters, in: International Macroeconomic Interdependence, chapter 2, pages 31-44, World Scientific Publishing Co. Pte. Ltd..
    9. Holger Görg & Michael Henry & Eric Strobl & Frank Walsh, 2009. "Multinational companies, backward linkages, and labour demand elasticities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(1), pages 332-348, February.
    10. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    11. Paul R. Bergin & Robert C. Feenstra & Gordon H. Hanson, 2007. "Outsourcing and Volatility," NBER Working Papers 13144, National Bureau of Economic Research, Inc.
    12. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(1), pages 31-66.
    13. 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.
    14. Paul Bergin & Robert Feenstra, 2006. "Outsourcing and Volatility," Working Papers 628, University of California, Davis, Department of Economics.
    15. Giorgio Barba Navaretti & Daniele Checchi & Alessandro Turrini, 2003. "Adjusting Labor Demand: Multinational Versus National Firms: A Cross-European Analysis," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 708-719, 04/05.
    16. Thesmar, David, 2004. "Financial Market Development and the Rise in Firm Level Uncertainty," CEPR Discussion Papers 4761, C.E.P.R. Discussion Papers.
    17. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    18. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group.
    19. Geishecker, Ingo, 2006. "The impact of international outsourcing on individual employment security: a micro level analysis," Discussion Papers 2006/17, Free University Berlin, School of Business & Economics.
    20. Kenneth Scheve & Matthew J. Slaughter, 2004. "Economic Insecurity and the Globalization of Production," American Journal of Political Science, John Wiley & Sons, vol. 48(4), pages 662-674, October.
    21. 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.
    22. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jaanika Merikull & Tairi Room, "undated". "Are foreign-owned firms different ? Comparision of employment volatility and elasticity of labour demand," Bank of Estonia Working Papers wp2014-1, Bank of Estonia.
    2. Katariina Nilsson Hakkala & Fredrik Heyman & Fredrik Sjöholm, 2010. "Multinationals, skills, and wage elasticities," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(2), pages 263-280, June.
    3. 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.
    4. Olivier Godart & Holger Görg & David Greenaway, 2013. "Domestic multinationals, foreign affiliates, and labour demand elasticities," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 611-630, December.
    5. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics.
    6. Kosack, Stephen & Tobin, Jennifer L., 2015. "Which Countries’ Citizens Are Better Off With Trade?," World Development, Elsevier, vol. 76(C), pages 95-113.
    7. Anna Ferragina & Fernanda Mazzotta, 2018. "Firm Employment Resilience and FDI: Evidence from Italy," L'industria, Società editrice il Mulino, issue 4, pages 523-556.
    8. Ashraf, Ayesha, 2015. "The Effects of Greenfield FDI and Cross-Border M&As on Government Size," MPRA Paper 65061, University Library of Munich, Germany.
    9. Karishma Banga, 2017. "Impact of Linking into Global Value Chains on Indian Employment," Working Papers 1701, Council on Economic Policies.
    10. 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.
    11. Buch, Claudia M. & Döpke, Jörg & Stahn, Kerstin, 2008. "Great moderation at the firm level? Unconditional versus conditional output volatility," Discussion Paper Series 1: Economic Studies 2008,13, Deutsche Bundesbank.
    12. Emanuele Forlani, 2010. "Competition in the Service Sector and the Performances of Manufacturing Firms: Does Liberalization Matter?," CESifo Working Paper Series 2942, CESifo.
    13. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    14. Buch Claudia M & Doepke Joerg & Stahn Kerstin, 2009. "Great Moderation at the Firm Level? Unconditional vs. Conditional Output Volatility," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-27, May.
    15. Tsun Se Cheong & Yanrui Wu, 2013. "Globalization and Regional Inequality," Economics Discussion / Working Papers 13-10, The University of Western Australia, Department of Economics.
    16. Andreas Lichter & Andreas Peichl & Sebastian Siegloch, 2017. "Exporting and labour demand: Micro-level evidence from Germany," Canadian Journal of Economics, Canadian Economics Association, vol. 50(4), pages 1161-1189, November.
    17. Michael Moritz & Bastian Stockinger & Merlind Trepesch, 2017. "Multinational Resilience or Dispensable Jobs? German FDI and Employment in the Czech Republic Around the Great Recession," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(3), pages 345-359.
    18. Hanan Nazier, 2019. "Estimating Labor Demand Elasticities and Elasticities of Substitution in Egyptian Manufacturing Sector: A Firm-Level Static Analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(4), pages 549-575, December.
    19. Konstantakopoulou, Ioanna & Tsionas, Mike G., 2019. "Measuring comparative advantages in the Euro Area," Economic Modelling, Elsevier, vol. 76(C), pages 260-269.
    20. Uwe Jirjahn, 2021. "Foreign ownership and intra-firm union density in Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 42(4), pages 1052-1079, November.

    More about this item

    Keywords

    Employment volatility Labor demand Multinational firms;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:17:y:2010:i:2:p:345-353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/labeco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.