Employment protection and FDI revisited: new evidence from micro data
Norback, P-J; Skedinger, P; Duanmu, J-L
Date: 22 December 2020
Article
Journal
The World Economy
Publisher
Wiley
Publisher DOI
Abstract
We use micro data on affiliates to Swedish multinational firms (MNEs) to explore the impact
of more stringent employment protection legislation (EPL) on foreign direct investment (FDI).
We add to the previous literature by exploring the impact of EPL on the extensive as well as
intensive margin, and by distinguishing the impact on ...
We use micro data on affiliates to Swedish multinational firms (MNEs) to explore the impact
of more stringent employment protection legislation (EPL) on foreign direct investment (FDI).
We add to the previous literature by exploring the impact of EPL on the extensive as well as
intensive margin, and by distinguishing the impact on different types of affiliates. We find that
employment and exports in exporting affiliates decline with EPL, and MNEs establish fewer
exporting affiliates. In contrast, employment and sales rise with EPL in purely “horizontal”
affiliates. We discuss possible mechanisms explaining this sharp asymmetry
Management
Faculty of Environment, Science and Economy
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