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OFFSHORING, MULTINATIONALS AND LABOUR MARKET: A REVIEW OF THE EMPIRICAL LITERATURE

OFFSHORING, MULTINATIONALS AND LABOUR MARKET: A REVIEW OF THE EMPIRICAL LITERATURE Abstract This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries' labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to make employment more volatile, by raising the elasticity of labour demand and the risk of job losses. Service offshoring exerts at most small negative effects on total employment, and changes the composition of the workforce in favour of high‐skilled white‐collar employees. Multinationals tend to substitute domestic and foreign labour in response to changes in relative wages across countries; substitutability is weak, however, and mainly driven by horizontal, market‐seeking foreign direct investments. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Surveys Wiley

OFFSHORING, MULTINATIONALS AND LABOUR MARKET: A REVIEW OF THE EMPIRICAL LITERATURE

Journal of Economic Surveys , Volume 23 (2) – Apr 1, 2009

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References (276)

Publisher
Wiley
Copyright
© 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd
ISSN
0950-0804
eISSN
1467-6419
DOI
10.1111/j.1467-6419.2008.00561.x
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries' labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to make employment more volatile, by raising the elasticity of labour demand and the risk of job losses. Service offshoring exerts at most small negative effects on total employment, and changes the composition of the workforce in favour of high‐skilled white‐collar employees. Multinationals tend to substitute domestic and foreign labour in response to changes in relative wages across countries; substitutability is weak, however, and mainly driven by horizontal, market‐seeking foreign direct investments.

Journal

Journal of Economic SurveysWiley

Published: Apr 1, 2009

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