Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-27T09:03:28.669Z Has data issue: false hasContentIssue false
  • English
  • Français

Firm Dynamics and Employment Adjustment: Multinational vs Domestic Firms

Published online by Cambridge University Press:  09 January 2015

Pierre Blanchard ,
Emmanuel Dhyne ,
Catherine Fuss  and
Claude Mathieu
Get access

Summary

The economic and financial crisis has meant sizeable employment losses that resulted from different adjustment mechanisms in domestic firms and multinational companies. This may be due to either production plant closures or downsizing by firms that remain active. This paper evaluates the importance of both phenomena for multinational and domestic firms in Belgium over the period preceding the crisis (1997-2008), using a firm-level dataset. Our results reveal that multinational enterprises tend to leave the local market more frequently than domestic firms with comparable firm and sector characteristics. Further, multinational incumbents face employment adjustment costs for white-collar workers that are around half of those borne by domestic firms. In sum, our findings suggest that multinational firms are more flexible in terms of plant location as well as in terms of employment adjustment. However, before the crisis, foreign multinationals created more jobs on average than other types of firms.

La crise économique et financière actuelle a causé de nombreuses pertes d'emploi, à la suite de différents mécanismes d'ajustement dans les entreprises domestiques et les multinationales. Ces mécanismes s'opèrent soit au travers de fermetures d'unités de production, soit de réductions d'effectifs par des entreprises qui continuent à opérer. Cet article évalue l'importance de ces deux processus en comparant les multinationales et les entreprises domestiques belges au cours de la période précédant la crise (1997-2008). L'analyse économétrique réalisée utilise des données individuelles d'entreprises. Nos résultats font apparaître que les multinationales ont tendance à quitter plus fréquemment le marché local que les entreprises domestiques présentant des caractéristiques comparables. Par ailleurs, les multinationales en activité sont confrontées à des coûts d'ajustement de l'emploi des travailleurs en col blanc qui sont environ deux rois moins élevés que ceux supportés par les entreprises domestiques. Nos résultats suggèrent donc que les multinationales sont plus flexibles tant sur le plan de la localisation que de l'ajustement de l'emploi. Toutefois, le processus d'ajustement a pu jouer dans l'autre sens. En effet, avant la crise, les multinationales étrangères ont créé en moyenne plus d'emplois que leurs concurrentes domestiques.

Keywords

multinational firmslabour adjustment costsfirm exitF23J23entreprises multinationalescoûts d'ajustements du travailsorties de firmesF23J23
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 79 , Issue 1 , March 2013 , pp. 59 - 81
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2013 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

Université Paris-Est, ERUDITE, UPEC, F-94010, Créteil, France

†

National Bank of Belgium, Research Department, and Université de Mons, Centre de recherche Warocqué

‡

Corresponding author, National Bank of Belgium, Research Department and Université Libre de Bruxelies e-mail: catherine.fuss@nbb.be

§

Université Paris-Est, ERUDITE, UPEC, F-94010, Créteil, France

References

Abowd, J. M. and Kramarz, F. (2003), “The costs of hiring and separations”, Labour Economics, vol. 10(5), pp. 499–530.Google Scholar
Abraham, F., Goesaert, T. and Konings, J. (2010), “Staying home or moving away? The effect of restructuring on employment in multinational headquarters and their affiliates”, Leuven, Belgium, Vives Discussion Paper n°12.Google Scholar
Ackerberg, D. A., Caves, K. and Frazer, G. (2006), “Structural identification of production functions”, mimeo.Google Scholar
Ai, C. and Norton, E. (2003), “Interaction terms in Logit and Probit models”, Economics Letters, vol. 80(1), pp. 123–129.Google Scholar
Alonso-Borrego, C. (1998), “LERand for labour inputs and adjustment costs: evidence from Spanish manufacturing firms”, Labour Economics, vol. 5(4), pp. 475–497.Google Scholar
Alvarez, R. and Görg, H. (2009), “Multinationals and plant exit: Evidence from Chile”, International Review of Economics and Finance, vol. 18(1), pp. 45–51.Google Scholar
Arellano, M. and Bover, O. (1995), “Another look at the instrumental variable estimation of error-components models”, Journal of Econometrics, vol. 68(1), pp. 29–51.Google Scholar
Barba Navaretti, G., Checci, D. and Turrini, A. (2003), “Adjusting labour demand: multinational versus national firms: a cross-European analysis”, Journal of the European Economic Association, vol. 1(2-3), pp. 708–719.Google Scholar
Bartelsman, E., Haltiwanger, J. and Scarpetta, S. (2009), “Measuring and analyzing cross-country differences in firm dynamics”, NBER Chapters 0480 in Producer Dynamics: New Evidence from Micro Data, Cambridge MA, National Bureau of Economic Research, Inc. Google Scholar
Bernard, A. and Jensen, J. B. (2007), “Firm structure, multinationals, and manufacturing plant deaths”, Review of Economics and Statistics, vol. 89(2), pp. 193–204.Google Scholar
Bernard, A. and Sjoholm, F. (2003), “Foreign owners and plant survival”, Cambridge MA, NBER Working Paper n° 10039.Google Scholar
Blanchard, P., Huiban, J.-P. and Mathieu, C. (2010), “Do sunk costs matter in exiting? An empirical investigation based on French firms”, Vienna, Austria, Micro-Dyn Working Paper n°20/10.Google Scholar
Blanchard, P., E. Dhyne, E., Fuss, C. and Mathieu, C. (2012), “(Not so) easy come, (still) easy go? Footloose multinationals revisited”, Brussels, Belgium, National Bank of Belgium Working Paper n° 223.Google Scholar
Blundell, R. and Bond, S. (1998), “Initial conditions and moment restrictions in dynamic panel data models”, Journal of Econometrics, vol. 87(1), pp. 115–143.Google Scholar
Boone, J., van Ours, J.C. and van der Wiel, H. (2007), “How (not) to measure competition”, London, United Kingdom, CEPR Discussion Papers n° 6275.Google Scholar
Bresson, G., Kramarz, F. and Sevestre, P. (1992), “Dynamic labour demand models”, in Matyas, L. and Sevestre, P. (eds.), Econometrics of Panel Data, Dordrecht, The Netherlands, Kluwer Academic Publishers.Google Scholar
Caparello, R., Federico, S. and Zucca, R. (2010), “FDI and corporate geography in the home country”, Vienna, Austria, FIW Working Paper n° 51.Google Scholar
Davis, S., Haltiwanger, J. and Schuh, J. (1996), Job Creation and Destruction, Cambridge MA, MIT Press.Google Scholar
Dhyne, E., Fuss, C. and Mathieu, C. (2011), “Labour demand adjustment: Does foreign ownership matter?”, Vienna, Austria, Micro-Dyn Working Paper n°40-10.Google Scholar
Görg, H. and Strobl, E. (2003), “Footloose Multinationals?”, Manchester School, vol. 71(1), pp. 1–19.Google Scholar
Griliches, Z. and Mairesse, J. (1995), ‘Production functions: the search for identification’, Cambridge MA, NBER Working Paper n° 5067.Google Scholar
Karaca-Mandic, P., Norton, E. and Dowd, B. (2012), “Interaction terms in nonlinear models”, Health Services Research, vol. 47(1), pp. 1–20.Google Scholar
Kramarz, F. and Michaud, M.-L. (2010), “The shape of hiring and separation costs in France”, Labour Economics, vol. 17(1), pp. 27–37.Google Scholar
Macher, J.T., Mayo, J.W. and Schiffer, M. (2011), ‘The influence of firms on governments’, The B.E. Journal of Economic Analysis & Policy, vol. 11, Article 1.Google Scholar
Mata, J. and Portugal, P. (2002), “The survival of new domestic and foreign owned firms”, Strategic Management Journal, vol. 23, pp. 323–343.Google Scholar
Meghir, C, Ryan, A. and Reenen, J. Van (1996), “Job creation, technological innovation and adjustment costs: Evidence from a panel of British firms”, Annates d'Economie et de Statistique, vol. 41-42, pp. 255–274.Google Scholar
Moscarini, G. and Postel-Vinay, F. (2012), “The contribution of large and small employers to job creation in times of high and low unemployment, American Economic Review, 102(6), pp. 2509–2539.Google Scholar
Mundlak, Y. (1978), “On the pooling of time series and cross-section data”, Econometrica, vol. 46(1), pp. 69–85.Google Scholar
Rivers, D. and Vuong, Q. (1988), “Limited Information Estimators and Exogeneity Tests for Simultaneous Probit Models”, Journal of Econometrics vol. 39(3), pp. 347–366.Google Scholar
Sutton, J.R (1991), Sunk costs and market structure, Cambrige, MA, MIT Press.Google Scholar
Van Beveren, I. (2007), “Footloose Multinationals in Belgium?”, Review of World Economics, vol. 143(3), pp. 483–507.Google Scholar