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Headquarter services, skill intensity and labour demand elasticities in multinational firms

Author

Listed:
  • Godart, Olivier N.
  • Görg, Holger
  • Greenaway, David

Abstract

Using information on a panel of multinational firms operating in the United Kingdom from 1996 to 2005, we find that labour demand in domestic multinationals is less sensitive to own labour costs changes than in foreign multinationals. This difference in wage elasticity of labour demand persists even if we allow for a distinct labour elasticity in multinational firms according to their level of skill intensity or their intangible assets. This suggests that the provision of headquarter services in domestic multinational firms shields against strong fluctuations in labour demand. In terms of labour demand elasticity reduction, the estimated shielding role of headquarter services is about 40 percent.

Suggested Citation

  • Godart, Olivier N. & Görg, Holger & Greenaway, David, 2009. "Headquarter services, skill intensity and labour demand elasticities in multinational firms," Kiel Working Papers 1575, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1575
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    File URL: https://www.econstor.eu/bitstream/10419/30049/1/618323422.pdf
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    Citations

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    Cited by:

    1. Markus Kelle, 2013. "Crossing Industry Borders: German Manufacturers as Services Exporters," The World Economy, Wiley Blackwell, vol. 36(12), pages 1494-1515, December.
    2. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    3. Procher, Vivien D. & Engel, Dirk, 2018. "The investment-divestment relationship: Resource shifts and intersubsidiary competition within MNEs," International Business Review, Elsevier, vol. 27(3), pages 528-542.

    More about this item

    Keywords

    Labour demand elasticity; headquarter services; multinational firms; skill intensity;
    All these keywords.

    JEL classification:

    • 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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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