Cross-Border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany
Rhine-Westphalia Institute for Economic Research (RWI-Essen)
Ruhr Graduate School in Economics; Rhine-Westphalia Institute for Economic Research (RWI-Essen)
University of Nottingham; Nottingham University Business School; University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP); Rhine-Westphalia Institute for Economic Research (RWI-Essen)
July 1, 2011
RUHR Economic Papers #268
We analyse how foreign direct investment (FDI) affects employment security using administrative micro data for German employees. FDI intensity is measured at the industry level, which enables us to take into account the sum of direct effects at the investing firms as well as indirect effects of FDI that stem from competitive effects, input-output linkages, technology spillovers, and changes in factor prices. We account for both inward and outward FDI, and differentiate these two types of FDI by source and destination region, respectively. We also investigate whether specific worker groups are affected differently by FDI. We find that both inward and outward FDI at the industry level significantly reduce employment security. This is particularly the case for inward FDI coming from the western part of the European Union, as well as for outward FDI going to Central and Eastern Europe. The effects are quantitatively small overall, but sizeable for some worker groups such as old and low-skilled workers.
Number of Pages in PDF File: 38
Keywords: foreign direct investment, labour market transitions, duration analysis
JEL Classification: F21, F23, J23, J63working papers series
Date posted: April 15, 2012
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