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Economic Insecurity and the Globalization of Production

Author

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  • Kenneth Scheve
  • Matthew Slaughter

Abstract

A common claim in debates about globalization is that economic integration increases worker insecurity. Although this idea is central to both political and academic debates about international economic integration, the theoretical basis of the claim is often not clear. There is also no empirical research that has directly tested the relationship. In this paper, we argue that economic insecurity among workers may be related to riskier employment and/or wage outcomes, and that foreign direct investment may be a key factor contributing to this increased risk by making labor demands more elastic. We present new empirical evidence, based on the analysis of panel data from Great Britain collected from 1991-1999, that FDI activity in the industries in which individuals work is positively correlated with individual perceptions of economic insecurity. This relationship holds in yearly cross-sections, in a panel accounting for individual-specific effects, and in a dynamic panel model also accounting for individual-specific effects.

Suggested Citation

  • Kenneth Scheve & Matthew Slaughter, 2002. "Economic Insecurity and the Globalization of Production," NBER Working Papers 9339, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9339
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    References listed on IDEAS

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    7. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
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    Citations

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    Cited by:

    1. repec:ilo:ilowps:371237 is not listed on IDEAS
    2. Lars Osberg, 2009. "Measuring Economic Security in Insecure Times: New Perspectives, New Events, and the Index of Economic Well-being," CSLS Research Reports 2009-12, Centre for the Study of Living Standards.
    3. repec:krk:eberjl:v:1:y:2013:i:3:p:21-33 is not listed on IDEAS
    4. Bernhard G. GUNTER & Rolph HOEVEN, 2004. "The social dimension of globalization: A review of the literature," International Labour Review, International Labour Organization, vol. 143(1-2), pages 7-43, March.
    5. Amy Jocelyn Glass, 2004. "Outsourcing under Imperfect Protection of Intellectual Property," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 867-884, November.
    6. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
    7. Pranab Bardhan, 2006. "Globalization, Inequality, and Poverty," IDB Publications (Working Papers) 9126, Inter-American Development Bank.
    8. Fred Robert-Nicoud (University of Geneva) & Niko Matouschek & Paolo Ramezzana (University of Virginia), 2004. "Labor Market Frictions, Job Insecurity and the Flexibility of the Employment Relationship," Econometric Society 2004 Australasian Meetings 52, Econometric Society.
    9. Niko Matouschek & Paolo Ramezzana, 2004. "Labor Market Frictions, Job Insecurity, and the Flexibility of the Employment Relationship," Econometric Society 2004 North American Summer Meetings 28, Econometric Society.
    10. Marks, Gary & Hooghe, Liesbet, 2003. "National identity and support for European integration," Discussion Papers, Research Unit: Democracy and Democratization SP IV 2003-202, Social Science Research Center Berlin (WZB).
    11. Naci Canpolat & Hüseyin Ozel, 2008. "Evolutionary Dynamics of Globalization," Working Papers 2008/16, Turkish Economic Association.
    12. Rehm, Philipp, 2005. "Citizen support for the Welfare State: Determinants of preferences for income redistribution," Discussion Papers, Research Unit: Institutions, States, Markets SP II 2005-02, Social Science Research Center Berlin (WZB).

    More about this item

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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