Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94739
Authors: 
Hatzius , Jan
Year of Publication: 
1996
Series/Report no.: 
IUI Working Paper 468
Abstract: 
This paper shows that the liberalisation of foreign direct investment (FDI) tends to make the effect of labour costs on domestic investment and labour demand more negative. Using data from Germany, it then provides evidence that is consistent with this view. First, high unit labour costs increase FDI outflows and lower FDI inflows. Second, the effect of unit labour costs on domestic manufacturing investment was more negative in the high-FDI 1980s than in the low-FDI 1970s, and this change was concentrated in high-FDI industries. The implied effect on long-run labour demand is substantial.
Subjects: 
INVESTMENTS
LABOUR MARKET
JEL: 
F33
J21
O16
Document Type: 
Working Paper

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