Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19652
Authors: 
Mündler, Marc-Andreas
Becker, Sascha O.
Year of Publication: 
2006
Series/Report no.: 
Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank 2006,24
Abstract: 
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 rarely found foreign wages or operations to affect employment. Our strategy detects salient adjustments for German MNEs. With a one-percent increase in German wages, German MNEs add 2,000 manufacturing jobs in Eastern Europe at the extensive margin and 4,000 jobs overall; a converse one-percent drop in Eastern European wages is associated with an overall withdrawal of 730 MNE jobs from Germany.
Subjects: 
Multinational enterprise
location choice
multiple sample selectivity
labor demand
translog cost function
nonparametric estimation
JEL: 
F21
F23
C14
J23
C24
Document Type: 
Working Paper

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