Banque Nationale De Belgique Sa · EURONEXT:BNB
Banque Nationale De Belgique Sa — National Bank of Belgium — NBB Conference on International Trade: Threats and Opportunities in a Globalised World 201 (October 2010)
24 slides from Banque Nationale De Belgique Sa's conference presentation, Oct 14, 2010
Slide 1: The Effects of Internationalization on Domestic Labour Demand by Skills: Firm-Level Evidence for Belgium
The Effects of Internationalization on Domestic Labour Demand by Skills: Firm-Level Evidence for Belgium Ludo CUYVERS (University of Antwerp, North-West University) Emmanuel DHYNE (NBB, Université de Mons) Reth SOENG (Steunpunt Buitenlands Beleid, University of Antwerp) NBB Conference on "Internatio
Slide 2: Structure of Presentation
Structure of Presentation Introduction Literature review Data and Descriptive Statistics Econometric Specification Estimation results Conclusion
Slide 3: Introduction
Introduction There have been extensive debates about the effects of globalization (international trade and OFDI) on employment, in particular unskilled workers. The concerns stem from the perception that these two international business activities tend to ‘export’ employment abroad, i.e. generate a
Slide 4: Literature review - Trade and employment
Literature review - Trade and employment Standard international trade theory predicts that international trade tends to reduce real income of the production factors with which a country is badly endowed, but raises the real reward of abundant factors of production. This implies that internationaliza
Slide 5: Literature review - Trade and employment
Literature review - Trade and employment Numerous studies on the employment effect of international trade. Results are mixed. Some find no relationship between international trade and employment of unskilled workers (Pryor, 1999; Krishna et al., 2001; Fajnzylber and Maloney, 2005; Haouas and Yagoubi
Slide 6: Literature review - OFDI and employment
Literature review - OFDI and employment International production by firms is often opposed as it may replace exports and thus reduce labour demand at home. International production may particularly affect low-skilled labour as it concerns relatively more labour-intensive production process. Effects
Slide 7: Literature review - OFDI and employment
Literature review - OFDI and employment Empirical findings about the employment effect of outward FDI are also mixed. Some find that foreign labour substitutes one-for-one for parent firm labour (Brainard and Riker, 1997; Riker and Brainard,1997). Others find that local employment growth is positive
Slide 8: Data
Data Merging of 4 data sources: Central Balance Sheet Office : annual accounts of Belgian firms; Foreign Trade Data : X and M, by products and country of destination/origin; Survey on Foreign Direct Investment : data on FDI by country of destination; Social Security Data Warehouse : average wage and
Slide 9: Data
Data Selection Manufacturing sector only "Profit-maximising" firms, observed at least 5 years in a row At least 10 employees (5 blue collars and 5 white collars) Full annual accounts Consistency between annual accounts / social security data / foreign trade data Additionnal trimming : outliers in ou
Slide 10: Data
Data Sample 20,766 observations 2458 firms 2334 Exporters / 2011 Low income countries exporters 2387 Importers / 1841 Low income countries importers 521 FDIers / 204 Low income countries FDIers INTRODUCTION LITERATURE DATA ECONOMETRIC SPECIFICATION RESULTS CONCLUSION
Slide 11: Exporters, Importers, and FDIers by type of country
Exporters, Importers, and FDIers by type of country # of firms # of Exporters # of Importers # of FDIers From year To r.o.w(1) To l.i.c.(2) r.o.w(1) From l.i.c.(2) In r.o.w(1) In l.i.c.(2) 1997 1,707 1,589 1,151 1,641 1,781 218 150 1998 1,922 1,720 1,268 1,799 1,915 267 170 1999 1,982 1,765 1,283 1,
Slide 12: Avg. export and import shares, and # of FDI
Avg. export and import shares, and # of FDI Avg. export share (in %)(1) Avg. import share (in %)(2) Avg. # of FDI projects(3) year To r.o.w(4) To l.i.c.(5) From r.o.w(4) From l.i.c.(5) In r.o.w(4) In l.i.c.(5) 1997 45.0 4.6 34.2 2.5 3.6 0.5 1998 46.9 4.4 35.6 2.7 3.9 0.7 1999 47.0 4.2 35.0 2.8 4.2 0
Slide 13: Econometric Specification
Econometric Specification Different frameworks considered for International Trade and FDI Impact of X, M on Blue and White Collar employment Dynamic cost share equation (extends Ekholm and Hakkala, 2008 or Rosholm et al., 2007) Impact of FDI on Blue and White Collar employment Static cost share equa
Slide 14: Econometric Specification
Econometric Specification Cost share equation Two variable inputs : Blue and White labour Capital stock pre-determined Baseline specification for cost share equation sit = i+ wrelit + yit + kit + 1 zit + 2 zlowit + Dt + it Impact of zlow = 1+ 2 INTRODUCTION LITERATURE DATA ECONOMETRIC SPECIFICATION
Slide 15: Econometric Specification
Econometric Specification Cost share equation For FDI (static equation) : zit = number of FDI projects or FDI indicator For international trade (dynamic equation): zit = export share (% of turnover), import share (% of intermediate inputs) Dynamic specification with two lags for all variables (Holly
Slide 16: Econometric Specification
Econometric Specification Cost share equation (Long-run) elasticities of blue and white labour demand with respect to z and zlow are derived from estimated coefficients. C.I. for elasticities computed by bootstrap (Elkhom and Hakkala, 2008) C.I. based on empirical percentiles, not on std-errors (due
Slide 17: Econometric Specification
Econometric Specification "Event studies" equations How new FDI affects domestic labour demand over time ? Focus on a sub-sample of observations New FDI project in t but not in t - 1, t + 1 and t + 2 INTRODUCTION LITERATURE DATA ECONOMETRIC SPECIFICATION RESULTS CONCLUSION
Slide 18: Econometric Specification
Econometric Specification "Event studies" equations Set of 4 equations (li,t-1 - li,t-2) = 1i + 11 NFDIit + 12 NFDIlowit +control variables + 1it (lit - li,t-1) = 2i + 21 NFDIit + 22 NFDIlowit +control variables + 2it (li,t+1 - li,t-1) = 3i + 31 NFDIit + 32 NFDIlowit +control variables + 3it (li,t+2
Slide 19: Results - Import shares and export shares
Results - Import shares and export shares z = import share z = export share Lnp Lp Lnp Lp Wnp -0.2636* - -0.2105* - [-0.5067 ; 0.0017] [-0.4624 ; 0.0353] Wp - -0.6294** - -0.6654** [-0.8122 ; -0.4634] [-0.8381 ; -0.4917] y 0.1642** -0.1114** 0.1756** -0.1191** [0.1036 ; 0.2769] [-0.1914 ; -0.0706] [
Slide 20: Results - Outward FDI (cost share)
Results - Outward FDI (cost share) z = # of Outward FDI links z = Outward FDI indicator Lnp Lp Lnp Lp Wnp -0.1665** - -0.1654** - [-0.2431 ; -0.0959] [-0.2430 ; -0.0943] Wp - -0.6957** - -0.6964** [-0.7455 ; -0.6404] [-0.7470 ; -0.6413] y 0.0223** -0.0152** 0.0222** -0.0151** [0.0024 ; 0.0421] [-0.0
Slide 21: Results - Outward FDI (event study)
Results - Outward FDI (event study) Non-production labour Production labour (10) (11) (12) (13) (10) (11) (12) (13) NFDI 0.025** 0.014* 0.014 0.021 0.003 0.008 0.010 0.013 (0.010) (0.008) (0.011) (0.013) (0.009) (0.008) (0.013) (0.016) NFDIlow -0.046** -0.004 -0.025 -0.065** -0.021 -0.033** -0.061**
Slide 22: Conclusions
Conclusions Imports from low-income countries positively affect the demand for high-skilled workers. However, they reduce domestic demand for low- skilled workers. Exports are found to have a negative impact on white-collar workers, but increase demand for blue- collar workers. When splitting into d
Slide 23: Conclusions
Conclusions Regarding employment effects of outward FDI, OFDI in low-income countries significantly reduce demand for low-skilled labour, but positively affect skilled-labour demand. Results also suggest that setting up of a new project positively affects the demand for non- production workers one p
Slide 24: Thank you for your attention
Thank you for your attention