The impact of foreign direct investment in China on employment adjustments in Taiwan: Evidence from matched employer–employee data

Tsou, Meng-Wen, Liu, Jin-Tan, Hammitt, James K. and Fang, Ching-Fu (2013) The impact of foreign direct investment in China on employment adjustments in Taiwan: Evidence from matched employer–employee data. Japan and the World Economy, vol. 25-26. pp. 68-79.

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Official URL: http://tse-fr.eu/pub/28539

Abstract

Using a unique matched employer–employee dataset on Taiwanese manufacturing, we examine the impact of foreign direct investment in China on domestic employment adjustments controlling for firm and worker heterogeneity as well as for potential endogeneity of firms’ expansion in China. Our findings suggest that workers employed at firms with higher levels of investment in China are more likely to leave the firm, compared with workers at firms with zero or lower levels of investment in China. We provide evidence that foreign expansion in China decreases worker employment security at parent companies, particularly for low-skilled workers. Employment adjustments through employer-to-employer transitions are found to be highly associated with wage losses, with the strongest wage effects for low-skilled workers who shift employment between industries. Moreover, we find no evidence that FDI in China contributes to skill upgrading at parent companies.

Item Type: Article
Language: English
Date: 2013
Refereed: Yes
Uncontrolled Keywords: Foreign direct investment, Employment adjustment, Worker mobility, Employer-to-employer transition, Matched employer–employee data
JEL codes: F21 - International Investment; Long-Term Capital Movements
F23 - Multinational Firms; International Business
J63 - Turnover; Vacancies; Layoffs
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:50
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:28539
URI: http://publications.ut-capitole.fr/id/eprint/16590

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