Does Nationality of Ownership Matter for Labor Demands

Do multinational rms exhibit different patterns of labor demand from purely domestic rms? Many standardmodels of trade and multinational companies suggest one such differencemay be labor-demand elasticities. For several reasons, multinationalsmay have more-elastic labor demands than do purely domestic rms. In this paper we discuss the theory issues involved. We then present industry-levelevidence that, for U.K. and U.S. manufacturing, labor demand for less-skilled labor has become more elastic in recent decades—a period in which for both countries multinational activity has expanded. (JEL: F2, L1) 1