IDEAS home Printed from https://ideas.repec.org/a/pal/eurjdr/v31y2019i5d10.1057_s41287-019-00211-9.html
   My bibliography  Save this article

Job Quality, FDI and Institutions in Sub-Saharan Africa: Evidence from Firm-Level Data

Author

Listed:
  • Sotiris Blanas

    () (National Bank of Belgium)

  • Adnan Seric

    (United Nations Industrial Development Organization (UNIDO))

  • Christian Viegelahn

    (International Labour Organization (ILO))

Abstract

Using a unique sample of foreign-owned and domestic firms in Sub-Saharan Africa, we study the differences in the quality of jobs that they offer, and identify how these differences are associated with country-level institutional factors. We find that foreign-owned firms offer more stable and secure jobs than domestic firms, as evidenced by their higher and lower shares of permanent full-time and temporary employment, respectively. The job stability and security advantage of foreign-owned firms is smaller in countries with higher firing costs and better governance, where domestic firms are likely to offer more stable and secure jobs. In addition, foreign-owned firms are less likely to offer unpaid work and have a lower share of these workers. They also have a higher average training intensity and pay higher wages to different types of workers. The wage premia of foreign-owned firms are lower in countries with higher governance and social policy standards, where domestic firms are likely to pay higher wages. Finally, we show that the job quality advantage of foreign-owned firms depends on the location of their parents, the mode of their establishment, their main business purpose and the most critical investment incentive received from the host country.

Suggested Citation

  • Sotiris Blanas & Adnan Seric & Christian Viegelahn, 2019. "Job Quality, FDI and Institutions in Sub-Saharan Africa: Evidence from Firm-Level Data," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(5), pages 1287-1317, December.
  • Handle: RePEc:pal:eurjdr:v:31:y:2019:i:5:d:10.1057_s41287-019-00211-9
    DOI: 10.1057/s41287-019-00211-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41287-019-00211-9
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

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

    References listed on IDEAS

    as
    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. Poschke, Markus, 2013. "Who becomes an entrepreneur? Labor market prospects and occupational choice," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 693-710.
    3. Nick Bloom & Tobias Kretschmer & John Van Reenan, 2009. "Work-Life Balance, Management Practices and Productivity," NBER Chapters, in: International Differences in the Business Practices and Productivity of Firms, pages 15-54, National Bureau of Economic Research, Inc.
    4. John W. Budd & Jozef Konings & Matthew J. Slaughter, 2005. "Wages and International Rent Sharing in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 73-84, February.
    5. Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2013. "Foreign Firms, Domestic Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 292-325, April.
    6. Volker Nocke & Stephen Yeaple, 2008. "An Assignment Theory of Foreign Direct Investment," Review of Economic Studies, Oxford University Press, vol. 75(2), pages 529-557.
    7. Sjoholm, Fredrik & Lipsey, Robert E, 2006. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 201-221, October.
    8. Blomstrom, Magnus & Kokko, Ari, 1998. "Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    9. Ragnhild Balsvik, 2011. "Is Labor Mobility a Channel for Spillovers from Multinationals? Evidence from Norwegian Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 285-297, February.
    10. Fosfuri, Andrea & Motta, Massimo & Ronde, Thomas, 2001. "Foreign direct investment and spillovers through workers' mobility," Journal of International Economics, Elsevier, vol. 53(1), pages 205-222, February.
    11. Heyman, Fredrik & Sjoholm, Fredrik & Tingvall, Patrik Gustavsson, 2007. "Is there really a foreign ownership wage premium? Evidence from matched employer-employee data," Journal of International Economics, Elsevier, vol. 73(2), pages 355-376, November.
    12. Holger Görg & David Greenaway, 2004. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 19(2), pages 171-197.
    13. Freeman, Richard B. & Kruse, Douglas & Blasi, Joseph, 2008. "The same yet different: Worker reports on labour practices and outcomes in a single firm across countries," Labour Economics, Elsevier, vol. 15(4), pages 749-770, August.
    14. Amy Jocelyn Glass & Kamal Saggi, 2002. "Multinational Firms and Technology Transfer," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 495-513, December.
    15. Lipsey, Robert E. & Sjoholm, Fredrik, 2004. "Foreign direct investment, education and wages in Indonesian manufacturing," Journal of Development Economics, Elsevier, vol. 73(1), pages 415-422, February.
    16. Nicola D. Coniglio & Rezart Hoxhaj & Adnan Seric, 2017. "The demand for foreign workers by foreign firms: evidence from Africa," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 353-384, May.
    17. Fabian Barthel & Matthias Busse & Robert Osei, 2011. "The Characteristics and Determinants of FDI in Ghana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 23(3), pages 389-408, July.
    18. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    19. Almeida, Rita, 2007. "The labor market effects of foreign owned firms," Journal of International Economics, Elsevier, vol. 72(1), pages 75-96, May.
    20. Neil Foster‐McGregor & Anders Isaksson & Florian Kaulich, 2015. "Foreign Ownership and Labour in Sub‐Saharan African Firms," African Development Review, African Development Bank, vol. 27(2), pages 130-144, June.
    21. Rebecca F. Taylor, 2004. "Extending Conceptual Boundaries: Work, Voluntary Work and Employment," Work, Employment & Society, British Sociological Association, vol. 18(1), pages 29-49, March.
    22. Eric Strobl & Robert Thornton, 2004. "Do Large Employers Pay More? The Case Of Five Developing African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(1), pages 137-161, June.
    23. Beata S. Javorcik, 2015. "Does FDI Bring Good Jobs to Host Countries?," World Bank Research Observer, World Bank Group, vol. 30(1), pages 74-94.
    24. Dirk Willem te Velde, 2003. "Do Workers in Africa Get a Wage Premium if Employed in Firms Owned by Foreigners?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(1), pages 41-73, March.
    25. Markus Poschke, 2013. "‘Entrepreneurs out of necessity’: a snapshot," Applied Economics Letters, Taylor & Francis Journals, vol. 20(7), pages 658-663, May.
    26. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    27. Jennifer P. Poole, 2013. "Knowledge Transfers from Multinational to Domestic Firms: Evidence from Worker Mobility," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 393-406, May.
    28. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    29. Nicola D. Coniglio & Francesco Prota & Adnan Seric, 2015. "Foreign Direct Investment, Employment and Wages in Sub‐Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(7), pages 1243-1266, October.
    30. Kristiina Huttunen, 2007. "The Effect of Foreign Acquisition on Employment and Wages: Evidence from Finnish Establishments," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 497-509, August.
    31. Sjoholm, Fredrik & Lipsey, Robert E, 2006. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 201-221, October.
    32. Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, 2009. "The takeover and selection effects of foreign-owned establishments: an analysis using linked employer–employee data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 293-317, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sommer, Christoph, 2021. "The impact of patient capital on job quality, investments and firm performance: Cross-country evidence on long-term finance," Discussion Papers 6/2021, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).

    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. Sotiris Blanas & Adnan Seric & Christian Viegelahn, 2017. "Jobs, FDI and Institutions in Sub-Saharan Africa: Evidence from Firm-Level Data," Working Papers 152465485, Lancaster University Management School, Economics Department.
    2. David C Mare & Lynda Sanderson & Richard Fabling, 2014. "Earnings and Employment in Foreign-owned Firms," Treasury Working Paper Series 14/16, New Zealand Treasury.
    3. Sourafel Girma & Holger Görg & Erasmus Kersting, 2019. "Which boats are lifted by a foreign tide? Direct and indirect wage effects of foreign ownership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(6), pages 923-947, August.
    4. Hartmut Egger & Udo Kreickemeier, 2017. "Why Foreign Ownership May be Good for You," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 13, pages 381-421, World Scientific Publishing Co. Pte. Ltd..
    5. Hijzen, Alexander & Martins, Pedro S. & Schank, Thorsten & Upward, Richard, 2013. "Foreign-owned firms around the world: A comparative analysis of wages and employment at the micro-level," European Economic Review, Elsevier, vol. 60(C), pages 170-188.
    6. repec:ebd:wpaper:157 is not listed on IDEAS
    7. Ding, Ding, 2015. "Leaning from multinational companies through hiring: An empirical investigation," Working Paper Series in Economics and Institutions of Innovation 402, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    8. Sampson, Thomas, 2012. "Brain drain or brain gain? Technology diffusion and learning on-the-job," LSE Research Online Documents on Economics 51503, London School of Economics and Political Science, LSE Library.
    9. Dieter M. Urban, 2010. "FDI, Technology Spillovers, and Wages," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 443-453, August.
    10. Khadija Straaten & Niccolò Pisani & Ans Kolk, 2020. "Unraveling the MNE wage premium," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1355-1390, December.
    11. Jaan Masso & Priit Vahter, 2016. "Knowledge Transfer From Multinationals Through Labour Mobility: Learning From Export Experience," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 99, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    12. Gianluca Orefice & Nicholas Sly & Farid Toubal, 2015. "The Multinational Wage Premium and Wage Dynamics," CESifo Working Paper Series 5263, CESifo.
    13. Heyman, Fredrik & Sjoholm, Fredrik & Tingvall, Patrik Gustavsson, 2007. "Is there really a foreign ownership wage premium? Evidence from matched employer-employee data," Journal of International Economics, Elsevier, vol. 73(2), pages 355-376, November.
    14. Marzieh Abolhassani & Seçil Hülya Danakol, 2019. "Wage and competition channels of foreign direct investment and new firm entry," Small Business Economics, Springer, vol. 53(4), pages 935-960, December.
    15. Nikolaj Malchow-Møller & James R. Markusen & Bertel Schjerning, 2013. "Foreign Firms, Domestic Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 292-325, April.
    16. Peter Egger & Marko Koethenbuerger, 2016. "Hosting multinationals: Economic and fiscal implications," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(01), pages 45-69, February.
    17. Sourafel Girma & Yundan Gong & Holger Görg & Sandra Lancheros, 2016. "Estimating direct and indirect effects of foreign direct investment on firm productivity in the presence of interactions between firms," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT, chapter 12, pages 227-239, World Scientific Publishing Co. Pte. Ltd..
    18. Katariina Nilsson Hakkala & Alessandro Sembenelli, 2018. "Multinationals, competition and productivity spillovers through worker mobility," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 401-426, May.
    19. Galina Hale & Mingzhi Xu, 2016. "FDI effects on the labor market of host countries," Working Paper Series 2016-25, Federal Reserve Bank of San Francisco.
    20. Dasgupta, Kunal, 2012. "Learning and knowledge diffusion in a global economy," Journal of International Economics, Elsevier, vol. 87(2), pages 323-336.
    21. Cristina Jude, 2016. "Technology Spillovers from FDI. Evidence on the Intensity of Different Spillover Channels," The World Economy, Wiley Blackwell, vol. 39(12), pages 1947-1973, December.

    More about this item

    Keywords

    Job quality; FDI; Institutions; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

    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:pal:eurjdr:v:31:y:2019:i:5:d:10.1057_s41287-019-00211-9. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.palgrave-journals.com/ .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.