To Whom Does Outward FDI Give Jobs?
50 Pages Posted: 1 Nov 2016 Last revised: 13 Mar 2017
Date Written: September 30, 2016
In this paper, we examine the impact of outward foreign direct investment (OFDI) on the overall employment, using Korean industry-level data for the period 2007-2014. We further decompose the effects of OFDI into types of foreign investment and workers’ skill levels, separately for each employment status (permanent and temporary), so that we capture whether the MNEs initiating foreign investment prefer to employ temporary instead of permanent workers. Our main findings show that there is little evidence of the impact of OFDI on the overall industry employment of permanent workers, while OFDI is positively associated with the overall employment of temporary workers. Besides, OFDI leads to an increase in the number of jobs created for mediumskilled workers regardless of employment status, whereas there is a negative relationship between OFDI and the temporary employment of low-skilled workers. To be more specific, efficiency-seeking and export-platform-seeking types of OFDI is associated with an increase in the employment of mediumskilled workers.
Keywords: Foreign Direct Investment, Industry-level Employment, Skill Level, Employment Status
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