Abstract

Do multinational firms exhibit different patterns of labor demand from purely domestic firms? Many standard models of trade and multinational companies suggest one such difference may be labor-demand elasticities. For several reasons, multinationals may have more-elastic labor demands than do purely domestic firms. In this paper we discuss the theory issues involved. We then present industry-level evidence 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.

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