TY - UNPB

T1 - Multinationals do not export jobs, and other related results

AU - Soo, Kwok Tong

PY - 2018/9

Y1 - 2018/9

N2 - We develop a simple model of multinational firms, in which firms engage in production abroad to take advantage of cheap labour. There are gains from multinational firms beyond the standard gains from trade. The model makes two empirically testable predictions. First, firms with more foreign employment also have more domestic employment; multinationals are not net exporters of jobs. Second, the expansion of multinational activity will increase the overall size of the firm. We find that both predictions hold empirically, using a sample of the largest multinational firms. In addition, the presence of multinational firms raises welfare relative to when they are absent, although the proportional gain is not large.

AB - We develop a simple model of multinational firms, in which firms engage in production abroad to take advantage of cheap labour. There are gains from multinational firms beyond the standard gains from trade. The model makes two empirically testable predictions. First, firms with more foreign employment also have more domestic employment; multinationals are not net exporters of jobs. Second, the expansion of multinational activity will increase the overall size of the firm. We find that both predictions hold empirically, using a sample of the largest multinational firms. In addition, the presence of multinational firms raises welfare relative to when they are absent, although the proportional gain is not large.

KW - Multinational firms

KW - comparative advantage

M3 - Working paper

T3 - Economics Working Papers Series

BT - Multinationals do not export jobs, and other related results

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -