Multinational companies, backward linkages, and labour demand elasticities

Holger Görg*, Michael Henry, Eric Strobl, Frank Walsh

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

This paper investigates the link between nationality of ownership and wage elasticities of labour demand at the level of the plant. In particular, we examine whether labour demand in multinationals becomes less elastic with respect to the wage if the plant has backward linkages with the local economy. Our empirical evidence, based on a rich plant level dataset, shows that the extent of local linkages does indeed generally reduce the wage elasticity of labour demand. This result is economically important and holds for a number of different specifications.

Original languageEnglish
Pages (from-to)332-348
Number of pages17
JournalCanadian Journal of Economics
Volume42
Issue number1
Early online date28 Jan 2009
DOIs
Publication statusPublished - Feb 2009

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