TY - JOUR
T1 - Do multinational enterprises relocate employment to low-wage regions? evidence from European multinationals
AU - Konings, Jozef
AU - Murphy, Alan Patrick
N1 - Funding Information:
Remark: This research is supported by the Flemish Science Council and by The Irish Research Council for the Humanities and Social Sciences. We thank Filip Abraham, Patty Anderson, Andy Bernard, Jenny Hunt, Peter Neary, Gerard Pfann, Jan Svejnar, Kathy Terrell, Hylke Vandenbussche, Marno Verbeek, Reinhilde Veugelers, Paul Walsh, Ciara Whelan for valuable comments and discussions. This paper benefited from presentations at IZA, Bonn; Dartmouth College, USA; the K.U. Leuven; the William Davidson Institute at the Univ. of Michigan Ann Arbor; University College Dublin, IIIS in Trinity College Dublin; the Uni-versité Catholique de Louvain, the Université de Montréal and the Irish Economic Association annual conference 2002. Please address correspondence to Jozef Konings, LICOS, Centre for Transition Economics, Economics Department, Katholieke Universiteit Leuven, Debériotstraat 34, 3000 Leuven, Belgium; e-mail: [email protected]
PY - 2006/7
Y1 - 2006/7
N2 - This paper analyzes the employment behavior of home multinational enterprises (MNEs) in Europe. To this end we use a unique firm-level panel data set of more than 1,000 European multinational parent enterprises and their European affiliates. We find for parent firms operating in the manufacturing sector that the labor cost elasticity of parent employment with respect to North EU affiliates' labor costs is positive and statistically significant. This implies employment substitution between parents and their North EU based affiliates takes place in response to wage cost differentials between the parent and its North EU based affiliates. In contrast, we find no evidence for such substitution effects between parent employment and its affiliates that are located in low-wage regions in the EU and in Central and Eastern Europe.
AB - This paper analyzes the employment behavior of home multinational enterprises (MNEs) in Europe. To this end we use a unique firm-level panel data set of more than 1,000 European multinational parent enterprises and their European affiliates. We find for parent firms operating in the manufacturing sector that the labor cost elasticity of parent employment with respect to North EU affiliates' labor costs is positive and statistically significant. This implies employment substitution between parents and their North EU based affiliates takes place in response to wage cost differentials between the parent and its North EU based affiliates. In contrast, we find no evidence for such substitution effects between parent employment and its affiliates that are located in low-wage regions in the EU and in Central and Eastern Europe.
KW - Labor demand
KW - Multinational enterprises
KW - Relocation
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U2 - 10.1007/s10290-006-0067-7
DO - 10.1007/s10290-006-0067-7
M3 - Review article
AN - SCOPUS:33746897330
SN - 1610-2878
VL - 142
SP - 267
EP - 286
JO - Review of World Economics
JF - Review of World Economics
IS - 2
ER -