Muendler, Marc-Andreas and Becker, Sascha O.. (2010) Margins of multinational labor substitution. American Economic Review, Vol.100 (No.5). pp. 1999-2030. ISSN 0002-8282

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Abstract

Employment at a multinational enterprise (MNE) responds to wages at the extensive margin, when an MNE enters a foreign location, and at the intensive margin, when an MNE operates existing affiliates. We present an MNE model and conditions for parametric and nonparametric identification. Prior studies rarely found wages to affect MNE employment. Our integrated approach documents salient labor substitution for German manufacturing MNEs and removes bias. In Central and Eastern Europe, most employment responds at the extensive margin, while in Western Europe the extensive margin accounts for around two-thirds of employment shifts. At distant locations, MNEs respond to wages only at the extensive margin. (JEL F23, J23, J31, R32)

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	American Economic Review
Publisher:	American Economic Association
ISSN:	0002-8282
Official Date:	December 2010
Dates:	Date Event December 2010 Published
Volume:	Vol.100
Number:	No.5
Number of Pages:	32
Page Range:	pp. 1999-2030
Identification Number:	10.1257/aer.100.5.1999
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
URI:	http://wrap.warwick.ac.uk/id/eprint/4657

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