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Multinationals, Intrafirm Trade, and Employment Volatility

Author

Listed:
  • Kozo Kiyota

    (Keio Economic Observatory, Keio University)

  • Toshiyuki Matsuura

    (Keio Economic Observatory, Keio University)

  • Yoshio Higuchi

    (Faculty of Business and Commerce, Keio University)

Abstract

This paper examines the theoretically ambiguous relationship between the volatility of employment growth and the foreign exposure of firms. We employ unique Japanese firm-level data over the period 1994-2012. This allows us to investigate any differences in this relationship across multinational firms and trading and nontrading firms, manufacturing and wholesale trade, and intrafirm and interfirm trade. One major finding is that in manufacturing, employment volatility increases as the share of intrafirm exports to total sales increases. In contrast, in wholesale trade, employment volatility declines as the share of intrafirm imports to total imports increases. One possible interpretation of these results is that the transmission of foreign supply and demand shocks could be through not only manufacturing, but also wholesale trade firms. Further, a higher share of intrafirm trade could magnify foreign demand shocks in manufacturing, and could mitigate foreign supply shocks in wholesale trade.

Suggested Citation

  • Kozo Kiyota & Toshiyuki Matsuura & Yoshio Higuchi, 2019. "Multinationals, Intrafirm Trade, and Employment Volatility," Keio-IES Discussion Paper Series 2019-017, Institute for Economics Studies, Keio University.
  • Handle: RePEc:keo:dpaper:2019-017
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    References listed on IDEAS

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    Cited by:

    1. Minjung Kim, 2022. "Trade and employment volatility of firms during the global financial crisis and post-crisis," Empirical Economics, Springer, vol. 62(5), pages 2091-2109, May.

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    More about this item

    Keywords

    Employment volatility; Multinational firm; Intrafirm trade; Wholesale trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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