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The Effect of Outward Foreign Direct Investments on Home Employment: Evidence using Swiss Firm-Level Data

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  • Preetha Kalambaden, Daniel Steffen

Abstract

This paper investigates the effect of outward foreign direct investments (FDI) on home employment in an understudied context - a small economy with a large relative outward FDI stock. Using Swiss firm-level data we construct a novel instrumental variable to identify a direct negative displacement effect and an indirect positive output effect. We find that FDI to high-income countries have a positive effect on domestic jobs, while FDI to lower middle-income countries are associated with a loss of domestic jobs. Further, FDI to low-income countries tend to have a positive effect on home employment. Overall, the effect of outward FDI on home employment is small and tends to create more domestic jobs than it relocates.

Suggested Citation

  • Preetha Kalambaden, Daniel Steffen, 2020. "The Effect of Outward Foreign Direct Investments on Home Employment: Evidence using Swiss Firm-Level Data," Diskussionsschriften credresearchpaper28, Universitaet Bern, Departement Volkswirtschaft - CRED.
    • Handle: RePEc:rdv:wpaper:credresearchpaper28
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    References listed on IDEAS

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    12. repec:hal:spmain:info:hdl:2441/10144 is not listed on IDEAS
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    More about this item

    Keywords

    Foreign direct investments; home employment; multinational firms; globalization;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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