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Firm Dynamics and Employment Adjustment: Multinational vs Domestic Firms

Listed author(s):
  • Pierre BLANCHARD

    (Université de Paris-EST, ERUDITE)

  • Emmanuel DHYNE

    (National Bank of Belgium, Research Department)

  • Catherine FUSS

    (National Bank of Belgium, Research Department)

  • Claude MATHIEU

    (Université de Paris-Est, ERUDITE)

The economic and financial crisis has led to sizable employment losses resulting from different adjustment mechanisms in domestic and multinational firms. This may be due to either production plant closures or downsizing by those firms that remain active. This paper evaluates the importance of both phenomena for multinational and domestic firms in Belgium over the period preceding the crisis (1997–2008), using a firm-level dataset. Our results reveal that multinational enterprises tend to leave the local market more frequently than domestic firms with comparable firm and sector characteristics. Further, multinational incumbents face employment adjustment costs for white-collar workers that are around half of those borne by domestic firms. In sum, our findings suggest that multinational firms are more flexible in terms of both plant location and employment adjustment. However, before the crisis, foreign multinationals created more jobs on average than other types of firms.

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File URL: http://www.jstor.org/stable/41971366
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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 2013013.

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Length: 22
Date of creation: 01 Mar 2013
Handle: RePEc:ctl:louvre:2013013
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