Do Multinational Enterprises Relocate Employment to Low-Wage Regions? Evidence from European Multinationals

By Jozef Konings, A. Murphy. 2006

186 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7387bd0ea74056d4ec38294f5272d564061f11b0

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In Economics and Econometrics

Citations in the corpus

Outward FDI and Local Employment Growth in Italy (2008, background): “3 See Braconier and Ekholm (2000) on Swedish MNEs, and Konings and Murphy (2006) on European MNEs and their affiliates located in former EU-15 countries and in Eastern Europe.”
The Own-Wage Elasticity of Labor Demand: A Meta-Regression Analysis (2014, background): “…admin 1975-1997 Falk and Koebel (2004) intermediate-run, conditional structural-form, exogenous wage, FE industry-level, panel, admin 1978-1994 Konings and Murphy (2004) short-/long-run, conditional reduced-form, exogenous wage, FE firm-level, panel, survey 1993-1998 Mondino and Montoya…”
Foreign direct investment and firm performance: an empirical analysis of Italian firms (2016, unknown): “This result is in line with what Konings and Murphy (2006) find for a sample of European MNEs investing in Europe.”
Self-Selection into Export Markets by Business Services Firms: Evidence from France, Germany and the United Kingdom (2013, methodology): “The dataset used in this paper for France and the United Kingdom (UK) has primarily been drawn from ORBIS which is a comprehensive and rich firm-level dataset and has been widely used (e.g. Helpman et al. 2004; Budd et al. 2005; Konings and Murphy 2006).”
Do Financial Constraints Matter for Foreign Market Entry? A Firm-Level Examination (2008, unknown): “The AMADEUS database has been used in numerous empirical studies on internationalisation topics (Bud et al 2004, Konings and Murphy 2006, Helpman et al 2004, to mention a few).”
Foreignness and exit over the life cycle of firms (2012, background): “A recent example of this is the concern that emerged regarding the most recent enlargement of the European Union that firms might be de-locating from some areas toward others (see Konings & Murphy, 2006).”
Margins of Multinational Labor Substitution (2006, background): “These elasticities quantify the response of labor demand in one location to permanent wage changes at the same location or elsewhere.”
Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany (2008, background): “ Konings and Murphy 2006; Peri and Urban 2006).”