The Effects of Internationalisation on Domestic Labour Demand by Skills: Firm-Level Evidence for Belgium

National Bank of Belgium Working Paper No. 206

30 Pages Posted: 17 Oct 2010

See all articles by Ludo Cuyvers

Ludo Cuyvers

affiliation not provided to SSRN

Emmanuel Dhyne

National Bank of Belgium

Reth Soeng

University of Antwerp

Date Written: October 1, 2010

Abstract

We empirically investigate the effects of the internationalisation of Belgian firms on domestic demand for production and non-production workers, which are used as proxies for unskilled and skilled labour. Distinction is made between home-employment effects of firms’ internationalisation, through either international trade or outward foreign direct investment, in high-income countries and in low-income economies. The results of our econometric analysis, using data over 1997-2007, suggest that increasing import shares from low-income countries or investing in those countries significantly reduces demand for low-skilled labour, while it increases demand for skilled labour. An increase in exports generally raises the demand for production workers, while it reduces the demand for non-production workers. However, these effects are reversed in the case of exports to low-income countries. Considering the impact of FDI, our results tentatively suggest that the setting up of a new international investment project has a positive impact on demand for non-production workers one period before it is made. This positive effect is offset in the long run, particularly in the case of investment in low-income countries.

Keywords: labour demand, international trade, outward FDI, skilled and unskilled labour

JEL Classification: C23, F16, F21

Suggested Citation

Cuyvers, Ludo and Dhyne, Emmanuel and Soeng, Reth, The Effects of Internationalisation on Domestic Labour Demand by Skills: Firm-Level Evidence for Belgium (October 1, 2010). National Bank of Belgium Working Paper No. 206. Available at SSRN: https://ssrn.com/abstract=1692600 or http://dx.doi.org/10.2139/ssrn.1692600

Ludo Cuyvers

affiliation not provided to SSRN

No Address Available

Emmanuel Dhyne (Contact Author)

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Reth Soeng

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

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