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Multinational companies and indirect employment: measurement and evidence


  • Holger Gorg


This study suggests a new approach towards measuring the indirect employment effects of multinational companies (MNCs) using a simple Cobb-Douglas production function. Based on the assumption that domestic sales by indigenous firms in a sector are supplies for multinationals in that sector rather than final goods, indirect employment effects are measured as the effect of an increase in domestically purchased inputs on employment in indigenously-owned suppliers. Applying this measure to data for the electronics sector in Ireland we find that there have been positive indirect effects of MNCs on employment in indigenous firms. The value of the estimated coefficients depends somewhat on the specification of the model estimated but the standard specification suggests that a 10% increase in domestically sold output by indigenous firms leads to an employment growth of around 2% in these firms.

Suggested Citation

  • Holger Gorg, 2000. "Multinational companies and indirect employment: measurement and evidence," Applied Economics, Taylor & Francis Journals, vol. 32(14), pages 1809-1818.
  • Handle: RePEc:taf:applec:v:32:y:2000:i:14:p:1809-1818
    DOI: 10.1080/000368400425035

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    References listed on IDEAS

    1. Mahmud Sadeg, 1996. "A Production Function Explanation of Irish Economic Growth 1951-1984," Economics Technical Papers 962, Trinity College Dublin, Department of Economics.
    2. Lall, S., 1979. "The indirect employment effects of multinational enterprises in developing countries," ILO Working Papers 992007953402676, International Labour Organization.
    3. repec:ilo:ilowps:200795 is not listed on IDEAS
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    Cited by:

    1. Fortanier, Fabienne & van Wijk, Jeroen, 2010. "Sustainable tourism industry development in sub-Saharan Africa: Consequences of foreign hotels for local employment," International Business Review, Elsevier, vol. 19(2), pages 191-205, April.
    2. Saibal Kar & Chaitali Sinha, 2014. "Sectoral Technical Progress and Aggregate Skill Formation," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 159-172, June.
    3. Fabienne Fortanier & Selwyn Moons, 2011. "Foreign Investors in The Netherlands: Heterogeneous Employment and Productivity Effects," De Economist, Springer, vol. 159(4), pages 511-531, December.

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