Kiel Working Papers, Kiel Institute for World Economics
No 1575:
Headquarter services, skill intensity and labour demand elasticities in multinational firms
Olivier N. Godart, Holger Görg and David Greenaway
Abstract: Using information on a panel of multinational firms
operating in the United Kingdom from 1996 to 2005, we find that labour
demand in domestic multinationals is less sensitive to own labour costs
changes than in foreign multinationals. This difference in wage elasticity
of labour demand persists even if we allow for a distinct labour elasticity
in multinational firms according to their level of skill intensity or their
intangible assets. This suggests that the provision of headquarter services
in domestic multinational firms shields against strong fluctuations in
labour demand. In terms of labour demand elasticity reduction, the
estimated shielding role of headquarter services is about 40 percent
Keywords: labour demand elasticity, headquarter services, multinational firms, skill intensity; (follow links to similar papers)
JEL-Codes: F23,; J23,; J24; (follow links to similar papers)
35 pages, December 2009
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