This paper investigates the extent to which expansion of international production by US multinationals reduces labour demand at home and at other foreign locations in the presence of labour adjustment costs. The adjustment-cost model of the firm is applied to estimate short-run and long-run price elasticities between home and foreign labour, using dynamic panel data techniques. Evidence is found of significant adjustment costs for employment in Latin American and Canadian affiliates. Also, due to slow adjustments, the relationship between employment in US parents and in Latin America affiliates is reversed from the short to the long-run, changing from substitution into complementarity. Finally, labour substitution prevails both in the short and in the long-run between locations in North America and in Europe.

(2003). Multinational corporations, wages and employment: Do adjustment costs matter? [journal article - articolo]. In APPLIED ECONOMICS. Retrieved from https://hdl.handle.net/10446/260772

Multinational corporations, wages and employment: Do adjustment costs matter?

Falzoni, Anna Maria
2003-01-01

Abstract

This paper investigates the extent to which expansion of international production by US multinationals reduces labour demand at home and at other foreign locations in the presence of labour adjustment costs. The adjustment-cost model of the firm is applied to estimate short-run and long-run price elasticities between home and foreign labour, using dynamic panel data techniques. Evidence is found of significant adjustment costs for employment in Latin American and Canadian affiliates. Also, due to slow adjustments, the relationship between employment in US parents and in Latin America affiliates is reversed from the short to the long-run, changing from substitution into complementarity. Finally, labour substitution prevails both in the short and in the long-run between locations in North America and in Europe.
articolo
2003
Bruno, Giovanni S. F.; Falzoni, Anna Maria
(2003). Multinational corporations, wages and employment: Do adjustment costs matter? [journal article - articolo]. In APPLIED ECONOMICS. Retrieved from https://hdl.handle.net/10446/260772
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/260772
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