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The Internationalisation of Production, International Outsourcing and Employment in the OECD

Author

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  • Margit Molnar
  • Nigel Pain
  • Daria Taglioni

Abstract

This paper reviews some of the possible changes that may occur in the national labour markets of many OECD countries as a result of international trade and the internationalisation of production by multinational companies, with a particular focus on the impact of outward foreign direct investment (FDI) from OECD countries on employment in the home country of the investing firms. Existing studies suggest that the overall impact of trade and the internationalisation of production on aggregate labour market outcomes has been comparatively small, although particular skill and occupational groups have been affected more strongly. The empirical findings in the paper suggest that the aggregate employment impact of outward FDI varies across industries and countries. For manufacturing industries with strong commercial links with the non-OECD economies, there is evidence that domestic employment has become more sensitive to movements in domestic labour costs. At the country level, the growth of outward investment is found to have a significant positive effect on domestic employment growth in the United States. In contrast, there is a negative association in Japan, especially from outward investment in China. L'internationalisation de la production, délocalisations et emploi dans les pays de l'OCDE Ce papier présente quelques uns des changements possibles résultant du commerce international et de l’internationalisation de la production des firmes multinationales, qui ont pu affecter les marchés du travail de plusieurs pays de l’OCDE. Un intérêt particulier est porté sur l’impact des flux d’investissement direct étrangers sortants des pays de l’OCDE sur l’emploi dans le pays d’origine des firmes qui investissent. Les études existantes concluent que l’effet global du commerce et de l’internationalisation de la production sur le marché du travail a été limité. Toutefois, certaines catégories socioprofessionnelles et certains savoirs ont été touchés plus sensiblement. Les résultats empiriques du papier indiquent que l’impact sur l’emploi agrégé des flux d’investissement direct étrangers sortants est différent selon les pays et les industries. Pour les entreprises du secteur manufacturier qui ont des liens commerciaux forts avec les pays non-OCDE, on trouve que l’emploi est devenu plus sensible aux mouvements des coûts salariaux domestiques. Au niveau des pays, on trouve que la croissance des flux d’investissement sortants a un effet significatif positif sur le taux de croissance de l’emploi aux Etats-Unis. En revanche, cet effet est négatif au Japon, notamment pour les flux d’investissement vers la Chine.

Suggested Citation

  • Margit Molnar & Nigel Pain & Daria Taglioni, 2007. "The Internationalisation of Production, International Outsourcing and Employment in the OECD," OECD Economics Department Working Papers 561, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:561-en
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    File URL: http://dx.doi.org/10.1787/167350640103
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    References listed on IDEAS

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    More about this item

    Keywords

    commerce; emploi; employment; foreign direct investment; fragmentation de la production; investissement direct étranger; production fragmentation; qualifications; skills; trade;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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