Does German foreign direct investment lead to job losses at home?

Yama Temouri, Nigel L. Driffield

Research output: Contribution to journalArticle

Abstract

This paper provides firm-level evidence on the labour demand effects of outward investments using a panel of multinationals (MNEs) based in Germany. Distinguishing the type of investments and the location of subsidiaries around the world between 1997 and 2008, our evidence shows that for both the manufacturing and services sector the expansion of employment abroad does not occur at the detriment of employment at home. The analysis is extended to see whether outward FDI causes average wage cuts for workers employed in the German parent firm. Our findings indicate no clear average wage effects due to outward FDI. Given that domestic MNEs are seen to play an important role in the growth potential for an economy, these findings are somewhat re-assuring from a policy point of view.
Original languageEnglish
Pages (from-to)243-263
Number of pages21
JournalApplied Economics Quarterly
Volume55
Issue number3
DOIs
Publication statusPublished - Jul 2009

Keywords

  • foreign direct investment
  • employment
  • offshoring

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