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Multinational Resilience or Dispensable Jobs? German FDI and Employment in the Czech Republic Around the Great Recession

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  • Michael Moritz
  • Bastian Stockinger
  • Merlind Trepesch

Abstract

This article investigates the employment development in Czech-based firms in German ownership in the years around the Great Recession of 2008/2009. The intense involvement of German firms in the economy of the neighbouring country via foreign direct investment (FDI) raises a question whether under the conditions of a historically deep global downturn, the Czech employees in multinational companies were confronted with an increased volatility of their jobs. Using a unique firm-level dataset, we contrast the affiliates of German investors with purely Czechowned enterprises. Our findings indicate that in the years before the crisis, firms with German capital exhibited a noticeably more positive employment development. The results from the year 2008 onwards give reason to the conclusion that the German-owned firms played a stabilizing role for the Czech labour market during the recession.

Suggested Citation

  • 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, University of Economics, Prague, vol. 2017(3), pages 345-359.
  • Handle: RePEc:prg:jnlpep:v:2017:y:2017:i:3:id:617:p:345-359
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    Cited by:

    1. Hecht, Veronika & Moritz, Michael & Noska, Patricia & Schäffler, Johannes, 2016. "Types of FDI and determinants of affiliate size: the classification makes the difference," IAB Discussion Paper 201625, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Dietrich, Hans, 2015. "Jugendarbeitslosigkeit aus einer europäischen Perspektive : theoretische Ansätze, empirische Konzepte und ausgewählte Befunde," IAB Discussion Paper 201524, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Möller, Joachim, 2015. "Verheißung oder Bedrohung? : die Arbeitsmarktwirkungen einer vierten industriellen Revolution," IAB Discussion Paper 201518, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    the Czech Republic; multinational firms; Germany; foreign direct investment; financial crisis; employment volatility;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G01 - Financial Economics - - General - - - Financial Crises
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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