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Foreign-owned Firms in the German Labour Market

31 Pages Posted: 9 Sep 2003  

Rolf Jungnickel

Hamburg Institute of International Economics

Dietmar Keller

Hamburg Institute of International Economics

Date Written: 2003

Abstract

Compared to other Western European countries, Germany was less successful in attracting FDI in the 1990s. The falling behind in inward-FDI should be no problem if foreign-owned firms (FoFs) were only substitutes for indigenous firms. However, to the
extent they differ significantly in terms of performance and structure, FoFs could be an interesting target group of economic policy. We empirically test three hypotheses: FoFs enjoy a productivity advantage over purely nationally operating firms but not - or less so - over multinationals headquartered in Germany (H1). The demand for qualified labour is higher in FoFs compared to German firms (H2). FoFs show a more flexible
conduct on the labour market than German-owned firms; they are less integrated in the traditional national labour market system (H3). Our analysis is based on the establishment panel of the Nuremberg Institute for Employment Research (IAB). The data largely support H1 and H2, whereas there is hardly evidence of a particular flexibility in the FoFs' conduct on the labour market.

Keywords: Multinational firms, Labour force and employment

JEL Classification: F230, J210

Suggested Citation

Jungnickel, Rolf and Keller, Dietmar, Foreign-owned Firms in the German Labour Market (2003). HWWA Discussion Paper No. 233. Available at SSRN: https://ssrn.com/abstract=426600 or http://dx.doi.org/10.2139/ssrn.426600

Rolf Jungnickel

Hamburg Institute of International Economics ( email )

Neuer Jungfernstieg 21
D-20347 Hamburg
Germany

Dietmar Keller (Contact Author)

Hamburg Institute of International Economics ( email )

Heimhuder Strasse 71
D-20347 Hamburg, DE Hamburg 20148
Germany

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