Wooton, I. and Haaland, J.I. and Faggio, G. (2003) Multinational Firms: Easy Come, Easy Go? FinanzArchiv, 59 (1). pp. 3-26. ISSN 0015-2218Full text not available in this repository. (Request a copy from the Strathclyde author)
It is often argued that countries with more flexible labor markets are better placed in attracting inward investment from multinational firms (MNEs). This is an issue when there is uncertainty in the marketplace and the firm faces some risk of closure of its branch plant. We study the MNE's location choice, explicitly taking into account exit, as well as entry, costs. We show that worker protection, through lay-off rules, deters potential investment in risky industries. Using evidence on MNE investment in Eastern Europe, we find support for our prediction that labor-market flexibility makes a location more attractive to the MNE.
|Keywords:||multinational firms, MNEs, Economic Theory, Finance|
|Subjects:||Social Sciences > Economic Theory|
|Department:||Strathclyde Business School > Economics|
|Depositing user:||Mrs Kirsty Fontanella|
|Date Deposited:||08 Feb 2010 12:28|
|Last modified:||22 Mar 2017 10:13|