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FDI in hot labour markets : the implications of the war for talent
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Becker, Bettina, Driffield, Nigel L., Lancheros, Sandra and Love, James H. (2020) FDI in hot labour markets : the implications of the war for talent. Journal of International Business Policy, 3 . pp. 107-133. doi:10.1057/s42214-020-00052-y ISSN 2522-0691.
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Official URL: https://doi.org/10.1057/s42214-020-00052-y
Abstract
This paper highlights an inherent contradiction that exists within investment promotion activities in rich countries. Since the financial crisis, many inward investment agencies have shifted their activities from job creation per se to seeking to attract investment in high-tech activities. Such knowledge-intensive sectors are engaged in what has become referred to as “the war for talent”, so locations need to understand their value proposition to firms, especially where labour is tight. This paper explores the implications of this, in terms of the impact on employment and earnings of high skilled labour. We show that, because skill shortages already exist in many of these sectors, seeking to attract inward investment in these sectors simply causes the earnings of such workers to be bid up, and employment in the incumbent sector to fall. We highlight the over-riding importance that firms place on the availability of skilled labour when determining locations, and how policies which promote labour market flexibility, particularly through investment in skills to address skill shortages, can significantly mitigate the adverse effects, which tend to be more keenly felt in poorer regions of Europe where skilled labour is in even shorter supply.
| Item Type: | Journal Article | |||||||||
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| Subjects: | H Social Sciences > HB Economic Theory | |||||||||
| Divisions: | Faculty of Social Sciences > Warwick Business School > Strategy & International Business Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Skilled labor -- Economic aspects, Labor market -- Effect of technological innovations on, Skilled labor -- Supply and demand -- Effect of technological innovations on., Labor market -- Econometric models | |||||||||
| Journal or Publication Title: | Journal of International Business Policy | |||||||||
| Publisher: | Palgrave Macmillan Ltd. | |||||||||
| ISSN: | 2522-0691 | |||||||||
| Official Date: | June 2020 | |||||||||
| Dates: |
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| Volume: | 3 | |||||||||
| Page Range: | pp. 107-133 | |||||||||
| DOI: | 10.1057/s42214-020-00052-y | |||||||||
| Status: | Peer Reviewed | |||||||||
| Publication Status: | Published | |||||||||
| Reuse Statement (publisher, data, author rights): | This is a post-peer-review, pre-copyedit version of an article published in Journal of International Business Policy. The definitive publisher-authenticated version Becker, B., Driffield, N., Lancheros, S. et al. FDI in hot labour markets: The implications of the war for talent. J Int Bus Policy (2020). https://doi.org/10.1057/s42214-020-00052-y is available online at: https://link.springer.com/article/10.1057/s42214-020-00052-y | |||||||||
| Access rights to Published version: | Open Access (Creative Commons) | |||||||||
| Date of first compliant deposit: | 24 March 2020 | |||||||||
| Date of first compliant Open Access: | 24 April 2021 | |||||||||
| RIOXX Funder/Project Grant: |
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