Margins of Multinational Labor Substitution
By Marc-Andreas Muendler, Sascha O. Becker. Social Science Research Network, 2006
146 citations recorded by the source corpus.
Multinational labor demand responds to wage differentials at the extensive margin, when a multinational enterprise (MNE) expands into foreign locations, and at the intensive margin, when an MNE operates existing affiliates across locations. We derive conditions for parametric and nonparametric identification of an MNE model to infer elasticities of labor substitution at both margins, controlling for location selectivity. Prior studies have rarely found foreign wages or operations to affect employment. Our strategy detects salient adjustments at the extensive margin for German MNEs. With every percentage increase in German wages, German MNEs allocate 2,000 manufacturing jobs to Eastern Europe at the extensive margin and 4,000 jobs overall.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/972d4e3ec8b7a373af430d5126e4bc2868faf107
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
Citations in the corpus
- Offshoring Jobs? Multinationals and U.S. Manufacturing Employment (2011, methodology): “…equation with growth in log labor at home as a function of log labor abroad, and Brainard and Riker (2001), Hanson, Slaughter, and Mataloni (2001), and Muendler and Becker (2009) use a short-run translog cost function approach to derive factor shares as a function of wages in different locations.”
- Foreign direct investment and firm performance: an empirical analysis of Italian firms (2016, unknown): “Muendler and Becker (2010) use an integrated econometric model that embeds location selection into labor-demand estimation.”
- Global Production with Export Platforms (2016, unknown): “Ramondo and Rodriguez-Clare (2013) develop a quantitative framework for multinational production and trade.”