Gross job flows and firms’ international activities

This article sums up the findings of an empirical study into the link between firms’ involvement in international markets – via international trade and direct investment – and employment developments in Belgium. The main novelty of the analysis lies in the use of a microeconomic database on non-financial corporations. This information notably makes it possible to analyse trends in employment by distinguishing between the job gains attributable to certain enterprises and, at the same time, the losses ascribed to others. Thus, besides the impact of international trade and foreign direct investment on domestic employment levels, it also enables an assessment of their role in the process of reallocating labour between firms. An examination of the microeconomic data, supplemented by an econometric analysis, shows that a relatively small proportion of Belgian firms is involved in international trade and that an even smaller fraction of them has foreign direct investment links. These firms can be distinguished by the large number of people they employ, as well as by their productivity levels, which are generally higher than those of firms geared exclusively towards the local market. Moreover, in comparison to the latter, they saw a higher average growth in the number of their employees between the years 1997 and 2005. This difference is all the more pronounced in the case of importing firms. Lastly, these companies are also characterised by job rotation on a smaller scale than that found in purely local firms. This lower degree of employment volatility can be explained by opportunities for diversifying the risks involved for firms operating on foreign markets as well as the domestic market. This diversification therefore enables workers to enjoy more stable employment conditions.