Working Paper: NBER ID: w7357
Authors: Robert E. Lipsey
Abstract: Despite the persistent fears that production abroad by U.S. multinationals reduces employment at home, there has, in fact, been almost no aggregate shift of production or employment to foreign countries. Some continuing shifts to foreign locations by U.S. manufacturing firms have been largely offset by shifts into the United States by foreign manufacturing multinationals. An analysis of individual firm data indicates that higher levels of production in developing countries by a firm are associated with lower employment at home for a given level of production. The reason is that U.S. multinationals tend to allocate their more labor-intensive production to developing country affiliates and retain more capital-intensive and skill-intensive operations in the United States.
Keywords: No keywords provided
JEL Codes: F23; J23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher levels of production by U.S. firms in developing countries (F23) | lower employment levels at home (J68) |
| higher levels of production by U.S. firms in developing countries (O51) | decrease in labor intensity of domestic operations (J89) |
| decrease in labor intensity of domestic operations (J89) | lower employment levels at home (J68) |