Multinational companies, backward linkages, and labour demand elasticities

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Authors

Colleges, School and Institutes

Abstract

This paper investigates the link between nationality of ownership and wage elasticities of labour demand at the level of the plant. In particular, we examine whether labour demand in multinationals becomes less elastic with respect to the wage if the plant has backward linkages with the local economy. Our empirical evidence, based on a rich plant level dataset, shows that the extent of local linkages does indeed generally reduce the wage elasticity of labour demand. This result is economically important and holds for a number of different specifications.

Details

Original languageEnglish
Pages (from-to)332-348
Number of pages17
JournalCanadian Journal of Economics/Revue Canadienne d`Economique
Volume42
Issue number1
Publication statusPublished - 1 Feb 2009