Foreign direct investment and search unemployment theory and evidence

Arbeitspapier

This paper proposes a simple multi-industry trade model with search frictions in the labor market. Unimpeded access to global financial markets enables capital owners to invest abroad, thereby fostering unemployment at the extensive industry margin. Whether a country benefits from FDI in terms of unemployment depends on the respective country's net-FDI, measured as the difference between in- and outward FDI. The derived FDI and unemployment nexus is tested employing macroeconomic data for 19 OECD countries on unemployment, FDI, and labor market institutions. Results support the model in that net-FDI is robustly associated with lower rates of aggregate unemployment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 4/2012

Classification and Topics

• Classification: Wirtschaft ; Trade and Labor Market Interactions ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; International Investment; Long-term Capital Movements
• Subject: FDI ; search unemployment ; labor market institutions ; Direktinvestition ; Globalisierung ; Arbeitslosigkeit ; Qualifikation ; Arbeitsuche ; Arbeitsmarkt ; Institutionalismus ; Theorie ; OECD-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmerer, Hans-Jörg
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/84930
• Last update: 10.03.2025, 11:43 AM CET