TY - JOUR
T1 - Domestic labour markets and foreign direct investment
AU - Haaland, Jan I.
AU - Wooton, Ian
PY - 2007
Y1 - 2007
N2 - We study how the labor market and industry uncertainty affect the investment decisions of multinational enterprises (MNEs). In an uncertain business climate, MNEs must take account of the future in deciding where to locate a branch plant. When wages are endogenously determined, both the opportunity cost of labor and redundancy payments influence the MNE's decision. When countries compete for foreign investment, different national characteristics determine the winners in different industries. Differences in risk may draw MNEs to different locations. Firm-specific bargaining always offers an advantage, as the mix of current and future pay fully reflects the firm's risk profile.
AB - We study how the labor market and industry uncertainty affect the investment decisions of multinational enterprises (MNEs). In an uncertain business climate, MNEs must take account of the future in deciding where to locate a branch plant. When wages are endogenously determined, both the opportunity cost of labor and redundancy payments influence the MNE's decision. When countries compete for foreign investment, different national characteristics determine the winners in different industries. Differences in risk may draw MNEs to different locations. Firm-specific bargaining always offers an advantage, as the mix of current and future pay fully reflects the firm's risk profile.
KW - labour markets
KW - foreign direct investment
KW - economics
UR - http://www.cepr.org/meets/wkcn/2/2303/papers/wooton.pdf
UR - http://dx.doi.org/10.1111/j.1467-9396.2007.00687.x
U2 - 10.1111/j.1467-9396.2007.00687.x
DO - 10.1111/j.1467-9396.2007.00687.x
M3 - Article
SN - 0965-7576
VL - 15
SP - 462
EP - 480
JO - Review of International Economics
JF - Review of International Economics
IS - 3
ER -