Are U.S. Multinationals Exporting U.S. Jobs?

28 Pages Posted: 16 Jul 2000

See all articles by S. Lael Brainard

S. Lael Brainard

Deputy National Economic Advisor, The White House; National Bureau of Economic Research (NBER)

David A. Riker

University of California at San Diego

Date Written: March 1997

Abstract

Many allege multinationals are exporting' U.S. jobs when they expand operations abroad. This paper investigates the extent to which expansion of offshore production by U.S. multinationals reduces labor demand at home and at other offshore locations, using a panel on U.S. multinationals and their foreign affiliates between 1983 and 1992. The results suggest that foreign affiliate employment substitutes modestly at the margins for U.S. parent employment. There is much stronger substitution between workers at affiliates in alternative low wage locations. In contrast, activities performed by affiliates at locations with different workforce skill levels in the same region appear to be complements. The results suggest a vertical division of activities among countries with different workforce skill levels, where workers in developing countries compete with each other to perform the activities most sensitive to labor costs. When wages in developing countries, such as Mexico, fall 10 percent, U.S. parent employment falls 0.17 percent, while affiliates in other developing countries, such as Malaysia, lay off 1.6 percent of their workforce.

Suggested Citation

Brainard, S. Lael and Riker, David A., Are U.S. Multinationals Exporting U.S. Jobs? (March 1997). NBER Working Paper No. w5958. Available at SSRN: https://ssrn.com/abstract=225738

S. Lael Brainard

Deputy National Economic Advisor, The White House ( email )

Old Executive Office Building
725 17th Street, NW
Washington, DC 20502
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David A. Riker (Contact Author)

University of California at San Diego ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

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