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Investment abroad and adjustment at home: evidence from UK multinational firms

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  • Helen Simpson

    (CMPO University of Bristol, IFS and Oxford University Centre for Business Taxation)

Abstract

This paper provides new evidence on the effects of overseas FDI on the skill-mix of multinational firms’ home-country operations. The analysis exploits China’s WTO accession to identify the impact of outward investment into a low-wage economy, and uses plant-level data to investigate changes in industrial structure within firms driven by plant closures. As predicted by models of vertical FDI the paper demonstrates that overseas investment in low-wage economies is associated with asymmetric effects on workers in low and high-skill industries in the home economy, and in particular with firms closing down plants in low-skill industries.

Suggested Citation

  • Helen Simpson, 2009. "Investment abroad and adjustment at home: evidence from UK multinational firms," Working Papers 0903, Oxford University Centre for Business Taxation.
    • Handle: RePEc:btx:wpaper:0903
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    References listed on IDEAS

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    Cited by:

    1. Johannes Becker & Clemens Fuest, 2011. "The taxation of foreign profits — The old view, the new view and a pragmatic view," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 46(2), pages 92-97, March.
    2. Johannes Becker, 2013. "Taxation of Foreign Profits with Heterogeneous Multinational Firms," The World Economy, Wiley Blackwell, vol. 36(1), pages 76-92, January.
    3. Alexander Hijzen & Mauro Pisu & Richard Upward & Peter W. Wright, 2011. "Employment, job turnover, and trade in producer services: UK firm‐level evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(3), pages 1020-1043, August.
    4. Arndt Christian & Buch Claudia M & Schnitzer Monika E, 2010. "FDI and Domestic Investment: An Industry-Level View," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-22, July.
    5. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    6. Richard Kneller & Danny McGowan & Tomohiko Inui & Toshiyuki Matsuura, 2012. "Closure within multi-plant firms: evidence from Japan," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 647-668, December.

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    More about this item

    Keywords

    multinational enterprises; skills; globalisation;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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