Multinational Companies, Backward Linkages, and Labour Demand Elasticities

17 Pages Posted: 20 Jan 2009

See all articles by Holger Görg

Holger Görg

University of Kiel; Kiel Institute for the World Economy

Michael Henry

Aston University

Eric Strobl

Ecole Polytechnique, Paris - Department of Economic Sciences; IZA Institute of Labor Economics

Frank Walsh

National University of Ireland - University College Dublin

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Abstract

This paper investigates the link between nationality of ownership and wage elasticities of labour demand at the level of the plant. In particular, we examine whether labour demand in multinationals becomes less elastic with respect to the wage if the plant has backward linkages with the local economy. Our empirical evidence, based on a rich plant level dataset, shows that the extent of local linkages does indeed generally reduce the wage elasticity of labour demand. This result is economically important and holds for a number of different specifications.

JEL Classification: F23, J23, L23

Suggested Citation

Gorg, Holger and Henry, Michael and Strobl, Eric and Walsh, Frank, Multinational Companies, Backward Linkages, and Labour Demand Elasticities. Canadian Journal of Economics, Vol. 42, Issue 1, pp. 332-348, February 2009, Available at SSRN: https://ssrn.com/abstract=1330648 or http://dx.doi.org/10.1111/j.1540-5982.2008.01510.x

Holger Gorg (Contact Author)

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Michael Henry

Aston University ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom

HOME PAGE: http://www.abs.aston.ac.uk/newweb/staff/detail.asp/sfldStaffID=A0000543

Eric Strobl

Ecole Polytechnique, Paris - Department of Economic Sciences ( email )

Ecole Polytechnique
Department of Economics
Paris, 75005
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Frank Walsh

National University of Ireland - University College Dublin ( email )

Department of Economics
Belfield
Dublin 4
Ireland
353-1-7068697 (Phone)
353-1-2830068 (Fax)

HOME PAGE: http://www.ucd.ie/~economic/staff/fwalsh/

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