Location of R&D and High‐Tech Production by Vertically Integrated Multinationals
In: The economic journal: the journal of the Royal Economic Society, Volume 117, Issue 518, p. 512-543
ISSN: 1468-0297
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In: The economic journal: the journal of the Royal Economic Society, Volume 117, Issue 518, p. 512-543
ISSN: 1468-0297
In: VATT Institute for Economic Research Working Papers No. 74
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In: Review of World Economics, Volume 146, Issue 2, p. 263-280
The increase in foreign direct investments raises concerns about labor market consequences in many countries. It is feared that multinational firms are inclined to shift jobs abroad and increase job volatility. We use firm-level data to examine if multinationality and foreign ownership affect the wage elasticity of labor demand. Unlike previous studies, we distinguish the effect on different skill groups of employees. We find no general difference in wage elasticity between foreign and domestic firms but the wage elasticity is higher in multinational firms than in national firms, in particular for medium-skilled workers.
In: CESifo Working Paper No. 7858
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In: NBER Working Paper No. w26355
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In: The Canadian journal of economics: the journal of the Canadian Economics Association = Revue canadienne d'économique, Volume 45, Issue 3, p. 1083-1124
ISSN: 1540-5982
Abstract In R&D intensive industries, governments promote greenfield foreign investments, while being sceptical towards foreign acquisitions of domestic high‐quality firms. We develop a theoretical model that shows that foreign acquisitions are conducive to high‐quality targets because of strategic effects on the sales price. However, foreign firms 'cherry pick' high‐quality targets to expand R&D rather than to downsize. Otherwise, rivals expand R&D, making the acquisition unprofitable. Thus, our model predicts that acquired affiliates invest more in R&D than greenfield affiliates. Using affiliate data, we find evidence that acquired affiliates have a higher level of sequential R&D intensity than greenfield affiliates.
In: IFN Working Paper No. 772
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In: Scandinavian economic history review, Volume 46, Issue 3, p. 66-74
ISSN: 1750-2837