Cross-Border Investment, Heterogeneous Workers, and Employment Security - Evidence from Germany

38 Pages Posted: 28 Jul 2011

See all articles by Ronald Bachmann

Ronald Bachmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Daniel Baumgarten

Ruhr Graduate School in Economics; Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Joel Stiebale

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)

Date Written: July 1, 2011

Abstract

We analyze 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.

Keywords: foreign direct investment, labour market transitions, duration analysis

JEL Classification: F21, F23, J23, J63

Suggested Citation

Bachmann, Ronald and Baumgarten, Daniel and Stiebale, Joel, Cross-Border Investment, Heterogeneous Workers, and Employment Security - Evidence from Germany (July 1, 2011). Available at SSRN: https://ssrn.com/abstract=1898092 or http://dx.doi.org/10.2139/ssrn.1898092

Ronald Bachmann (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Daniel Baumgarten

Ruhr Graduate School in Economics ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
+492018149510 (Phone)
+492018149500 (Fax)

HOME PAGE: http://www.rgs.econ.org/

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
+492018149510 (Phone)
+492018149500 (Fax)

HOME PAGE: http://www.rwi-essen.de/

Joel Stiebale

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

University of Nottingham - Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
+492018149261 (Phone)

HOME PAGE: http://www.rwi-essen.de\stiebale

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