The effects of outward FDI on Domestic Employment

One of the channels through which home jobs may be affected by the increased degree of economic integration in the EU-25 is through the employment (re)-allocation choices of multinational enterprises. Using data on Italian multinationals, this paper examines the impact of Italian outward FDI on local employment between 2001 and 2005. The authors found some evidence of a complementary relationship between parent firm employment and affiliate employment located in Central and Eastern countries. They found no statistically significant effect of a reduction in wages on parent employment of affiliates located in “old” European Union members’. Keywords: multinational enterprises, foreign and domestic employment