The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies

This paper uses firm level panel data to investigate empirically the effects of foreign direct investment (FDI) on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe-Bulgaria, Romania and Poland. To this end, a unique firm level panel data set is used with detailed information on foreign ownership at the firm level. Two main questions are addressed: 1) Do foreign firms perform better than their domestic counterparts? 2) Do foreign firms generate spillovers to domestic firms?http://deepblue.lib.umich.edu/bitstream/2027.42/39728/3/wp344.pd

The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies

This paper uses firm level panel data to investigate empirically the effects of foreign direct investment (FDI) on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe-Bulgaria, Romania and Poland. To this end, a unique firm level panel data set is used with detailed information on foreign ownership at the firm level. Two main questions are addressed: 1) Do foreign firms perform better than their domestic counterparts? 2) Do foreign firms generate spillovers to domestic firms?foreign investment, spillovers, emerging countries, panel data

Do Multinational Enterprises Substitute Parent Jobs for Foreign Ones? Evidence from Firm Level Panel Data

This paper analyzes the demand for labor by home multinational enterprises (MNEs) in Europe. To this end we use a unique firm level panel data set of more than 1,200 European multinational enterprises and their subsidiaries that are located in either the European Union, Central and Eastern Europe or both. We investigate whether employment in the MNEs' subsidiaries are substitutes for home employment or in other words we investigate whether European MNEs can easily relocate employment between the parent and their daughter(s). Our main findings can be summarized as follows: (i) We find evidence for substitution effects between parent and foreign employment. A decline of 10% in MNE affiliate's wage costs is associated with a decline in parent employment of between 1.5% and 2% on average. (ii) This effect is mainly driven by firms that operate in the manufacturing sector. Moreover, the substitution effects mainly take place between EU parents and their affiliates located within the EU, rather than affiliates located in Central and Eastern Europe. (iii) We also report results for the non-manufacturing firms, where we find no substitution effects between parents and daughters in the service sectors, while we do find positive substitution effects between parents and their affiliates in Central and Eastern Europe for the firms operating in the wholesale trade and construction sectors. Our results suggest that on average the competition from low wage countries in Central and Eastern Europe did not contribute to a relocation of domestic jobs to Central and Eastern Europe. Substitution effects do take place, however, they mainly occur between parent firms and their affiliates that are located in the European Union.http://deepblue.lib.umich.edu/bitstream/2027.42/39755/3/wp371.pd

Marshall and Labour Demand in Russia: Going Back to Basics

Using a unique enterprise-level data set, which covers the regions Moscow City, Chelyabinsk, Krasnoyarsk and Chuvashia and the three sectors manufacturing and mining, construction and trade and distribution, we estimate Russian labour demand equations for the year 1997. The most important conclusion that can be drawn is that labour demand is inelastic in international perspective if we estimate a labour demand equation for all regions and all sectors combined. So, Russian MLEs well into the transition still exhibit peculiar behaviour as far as wage employment trade-offs are concerned. We try to relate this inelastic labour demand to basic neoclassical theory by testing Marshall's rules of derived demand. Our results show that testing these rules seems a promising avenue for establishing some of the driving forces, which are behind labour demand in Russia.labour demand, rules of derived demand, enterprise performance, transition to a market economy

Do Multinational Enterprises Substitute Parent Jobs for Foreign Ones? Evidence from Firm Level Panel Data

This paper analyzes the demand for labor by home multinational enterprises (MNEs) in Europe. To this end we use a unique firm level panel data set of more than 1,200 European multinational enterprises and their subsidiaries that are located in either the European Union, Central and Eastern Europe or both. We investigate whether employment in the MNEs' subsidiaries are substitutes for home employment or in other words we investigate whether European MNEs can easily relocate employment between the parent and their daughter(s). Our main findings can be summarized as follows: (i) We find evidence for substitution effects between parent and foreign employment. A decline of 10% in MNE affiliate's wage costs is associated with a decline in parent employment of between 1.5% and 2% on average. (ii) This effect is mainly driven by firms that operate in the manufacturing sector. Moreover, the substitution effects mainly take place between EU parents and their affiliates located within the EU, rather than affiliates located in Central and Eastern Europe. (iii) We also report results for the non-manufacturing firms, where we find no substitution effects between parents and daughters in the service sectors, while we do find positive substitution effects between parents and their affiliates in Central and Eastern Europe for the firms operating in the wholesale trade and construction sectors. Our results suggest that on average the competition from low wage countries in Central and Eastern Europe did not contribute to a relocation of domestic jobs to Central and Eastern Europe. Substitution effects do take place, however, they mainly occur between parent firms and their affiliates that are located in the European Union.relocation, multinational enterprises, labor demand

The impact of payroll tax reductions on employment and wages: A natural experiment using firm level data.

Labour market; Market; Markets; Model; Impact; Employment; Firm level data; Data;

Antidumping Protection hurts Exporters: Firm-level evidence from France

Firms protected by antidumping measures do not unequivocally benefit from them. Antidumping protection benefits non-exporters active on the protected market by raising their domestic sales, but hurts exporters of similar products as the protected ones. Export sales of protected firms fall by almost 8% compared to a relevant control group of unprotected firms. This effect more than doubles for firms that are global, i.e. firms with foreign affiliates. Measured at the product-level, extra-EU exports of goods protected by antidumping fall by 36% while exports to target countries fall by as much as 66% following protection. Protection also has an effect on the extensive margin, by raising the probability to start exporting for firms that were initially nonexporters. Existing exporters face a higher probability to stop exporting during protection. Finally, we find that the productivity of exporters falls while that of non-exporters rises during antidumping protection. We offer a number of plausible explanations for our findings that stem from the heterogeneous firm literature. We also discuss the importance of our findings for policy.Antidumping, firm-level exports, intensive margin, extensive margin, productivity, dif-in dif

Globalization and the effects of national versus international competition on the labour market. Theory and evidence from Belgian firm level data.

In this paper we first develop a simple theoretical framework which shows that important differences exist between national and international competition and their effect on national labour markets. National competition refers to a reduction of monopoly power in the product market through improved market contestability and market access, which is the responsibility of competition authorities. International competition refers to a reduction in product market competition as a result of trade liberalization. We show that when the domestic market is unionized, national entry (FDI or domestic entry) has very different effects on the national labour market than international entry (imports in the relevant product market). One result we obtain is that national competition need not increase domestic employment while trade competition need not lower domestic employment. Our analysis has at least two important implications. First, geographic location of competitors matters when institutional settings like trade unions are country specific. Second, a change in competition policy is likely to affect labour markets differently than a change in trade policy. The results also indicate that apart from location, market structure and the level at which wages are bargained over (firm or sector level) matter. In a further step the theoretical predictions we derive, are tested on Belgian company accounts data supplemented with data from a postal survey.