Title: Do multinational enterprises relocate employment to low-wage regions? Evidence from European multinationals
Authors: Konings, Joep ×
Murphy, Alan Patrick #
Issue Date: Jul-2006
Publisher: Springer
Series Title: Review of World Economics vol:142 issue:2 pages:267-286
Abstract: This paper analyzes the employment behavior of home multinational enterprises (MNEs) in Europe. To this end we use a unique firm-level panel data set of more than 1,000 European multinational parent enterprises and their European affiliates. We find for parent firms operating in the manufacturing sector that the labor cost elasticity of parent employment with respect to North EU affiliates' labor costs is positive and statistically significant. This implies employment substitution between parents and their North EU based affiliates takes place in response to wage cost differentials between the parent and its North EU based affiliates. In contrast, we find no evidence for such substitution effects between parent employment and its affiliates that are located in low-wage regions in the EU and in Central and Eastern Europe.
ISSN: 1610-2878
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of Monetary and Information Economics, Leuven
× corresponding author
# (joint) last author

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