TY - JOUR
T1 - Disemployment caused by foreign direct investment? Multinationals and Japanese employment
AU - Kambayashi, Ryo
AU - Kiyota, Kozo
N1 - Funding Information:
This research was conducted as a part of the Research Institute of Economy, Trade and Industry (RIETI) research project entitled “Competitiveness of Japanese Firms: Causes and Effects of the Productivity Dynamics”. The authors acknowledge helpful comments on an earlier draft from Taro Akiyama, Masahisa Fujita, Kyoji Fukao, Toshiyuki Matsuura, Hoang Thi Anh Ngoc, Kazuo Ogawa, Yasuyuki Todo, Nobuaki Yamashita, Liu Yang, the seminar participants at the IDE-JETRO, Kobe University, Kyoto University, RIETI, the University of Tokyo, Yokohama National University, and participants at the SFU–NIESG workshop at Simon Fraser University, the EITI 2014 in Phuket, and the Spring 2014 Meeting of the Japanese Economic Association. Financial support received from the Japan Society for the Promotion of Science (Grant-in-aid A-22243023 and B-26285058) is also gratefully acknowledged.
Publisher Copyright:
© 2014, Kiel Institute.
PY - 2015/8/28
Y1 - 2015/8/28
N2 - Using parent–foreign affiliate matched data on Japan from 1995 to 2009, this paper examines the effects of foreign direct investment (FDI) on domestic employment, especially in manufacturing. One of the contributions of this paper is that we utilize the matched data for each country in which Japanese multinational firms operate, which enables us to identify the differences in the impact of FDI between destinations. Results indicate that the increases in the investment goods price in China but the decreases in it in the United States negatively affected the domestic labor demand of multinationals in Japan. This contrast may reflect a difference in specialization patterns across countries. We also found that disemployment in Japan was driven mainly by substitution between capital and labor, rather than by the reallocation of labor from Japan to overseas.
AB - Using parent–foreign affiliate matched data on Japan from 1995 to 2009, this paper examines the effects of foreign direct investment (FDI) on domestic employment, especially in manufacturing. One of the contributions of this paper is that we utilize the matched data for each country in which Japanese multinational firms operate, which enables us to identify the differences in the impact of FDI between destinations. Results indicate that the increases in the investment goods price in China but the decreases in it in the United States negatively affected the domestic labor demand of multinationals in Japan. This contrast may reflect a difference in specialization patterns across countries. We also found that disemployment in Japan was driven mainly by substitution between capital and labor, rather than by the reallocation of labor from Japan to overseas.
KW - Foreign direct investment
KW - Unconditional labor demand
KW - Unemployment
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U2 - 10.1007/s10290-014-0205-6
DO - 10.1007/s10290-014-0205-6
M3 - Article
AN - SCOPUS:84938197447
SN - 1610-2878
VL - 151
SP - 433
EP - 460
JO - Review of World Economics
JF - Review of World Economics
IS - 3
ER -
