Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25758
Authors: 
Muendler, Marc-Andreas
Becker, Sascha
Year of Publication: 
2006
Series/Report no.: 
CESifo working paper 1713
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 have rarely found foreign wages or operations to affect employment. Our strategy detects salient adjustments at the extensive margin for German MNEs. With every percentage increase in German wages, German MNEs allocate 2,000 manufacturing jobs to Eastern Europe at the extensive margin and 4,000 jobs overall.
JEL: 
F21
F23
C14
C24
J23
Document Type: 
Working Paper

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