Do FDI Firms Employ More Workers than Domestic Firms for Each Dollar of Assets?
IMF Working Papers, March 13, 2020
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- Do FDI Firms Employ More Workers than Domestic Firms for Each Dollar of Assets?
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Bibliographic details
- Authors: Sakai Ando, Mengxue Wang
- Published: March 13, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513536323.001
Summary of research question and data
- Research question: Whether FDI firms employ more workers than domestic firms for each dollar of assets.
- Data source: Orbis database and its ownership structure information.
- Case study: United Kingdom (industry-level robustness check).
- Analysis of "switchers": firms with ownership changes from domestic to foreign or vice versa.
Key findings
- In most economies, domestic firms tend to employ more workers per asset than FDI firms.
- The result remains robust across individual industries in the United Kingdom case study.
- Analysis of switchers suggests ownership changes do not have an immediate impact on employment per asset.
- Implication drawn: different patterns of employment per asset seem to come from technological differences rather than from different ownership structures.
Methodology notes
- Uses firm-level data from the Orbis database with ownership structure information.
- Compares employment per asset across domestic and foreign-owned firms.
- Examines ownership switches to identify immediate effects of ownership change on employment per asset.
Policy-relevant implications
- Employment differences between FDI and domestic firms are linked to technological differences, not necessarily to ownership per se.
- Policies aimed at job creation should consider firm-level technology adoption and capital-labor choices, not only ownership status.
- Monitoring technological adoption and capital intensity may be more effective for employment outcomes than focusing solely on attracting foreign ownership.
Keywords and subjects emphasized in the paper
- Subjects: Asset and liability management, Balance of payments, Employment, Expenditure, Foreign direct investment, Labor, Public expenditure review, Special purpose vehicle.
- Keywords: C firm d, company, data of Orbis, domestic firm, Employment, FDI firm, firm B, firm ID, firm size, Foreign direct investment, Job Creation, Orbis, Ownership, parent firm, Public expenditure review, Special purpose vehicle, WP.
Do FDI Firms Employ More Workers than Domestic Firms for Each Dollar of Assets? — Sakai Ando, Mengxue Wang; March 13, 2020.
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- Working Paper