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Domestic labour markets and foreign direct investment

Haaland, Jan I. and Wooton, Ian (2007) Domestic labour markets and foreign direct investment. Review of International Economics, 15 (3). pp. 462-480. ISSN 0965-7576

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Abstract

We study how the labor market and industry uncertainty affect the investment decisions of multinational enterprises (MNEs). In an uncertain business climate, MNEs must take account of the future in deciding where to locate a branch plant. When wages are endogenously determined, both the opportunity cost of labor and redundancy payments influence the MNE's decision. When countries compete for foreign investment, different national characteristics determine the winners in different industries. Differences in risk may draw MNEs to different locations. Firm-specific bargaining always offers an advantage, as the mix of current and future pay fully reflects the firm's risk profile.

Item type: Article
ID code: 7910
Keywords: labour markets, foreign direct investment, economics, Commerce, Economic Theory
Subjects: Social Sciences > Commerce
Social Sciences > Economic Theory
Department: Strathclyde Business School > Economics
Related URLs:
Depositing user: Strathprints Administrator
Date Deposited: 29 Apr 2009 14:55
Last modified: 12 Mar 2012 10:48
URI: http://strathprints.strath.ac.uk/id/eprint/7910

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