سرمایه گذاری مستقیم خارجی و بیکاری جستجوگر : نظریه و شواهد

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 foreign direct investments (FDI) in terms of unemployment depends on the respective country's net-FDI, measured as the difference between in- and outward FDI. The link between FDI and unemployment derived in the model is tested using 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.

The ongoing integration of product and labor markets has stimulated a lively debate about the pros and cons of globalization. Supporters often stress the beneficial effects that arise due to increased export opportunities, whereas globalization's detractors are usually more concerned about job losses due to heightened competition from so-called low-income countries. Economics can contribute to this debate in that it can rationalize the fear that more intensive global economic-interdependency generates by identifying the merits and downsides of this process and by quantifying the labor market outcomes of the potentially opposing effects. The public debate that surrounds these issues has frequently been characterized by a lack of clarity regarding the definition of globalization and a failure to account for different elements of this process which may have contrasting implications for domestic and international labor markets. This paper focuses on the implications of capital mobility for domestic and international labor markets by proposing an empirical test on the link between FDI and unemployment. The test is based on a simple multi-industry model with unemployment due to search frictions. Closely related to Dutt, Mitra, and Ranjan (2009), I incorporate Mortensen and Pissarides (1994) search frictions into a trade model. However, capital markets are integrated, which facilitate the study of foreign direct investment and its effects on equilibrium unemployment. Moreover, the trade model employed features a continuum of industries. Thus, the outcome of the model is different from previous studies in that the effect is ex-ante ambiguous and highly depends on whether a country is the FDI receiving or sending country.1 The intuition behind that result is that FDI directly affects intermediates (labor) demand at the extensive margin through endogenous adjustments of capital costs. The adjustments in production costs trigger an expansion of the FDI receiving country's range of active industries through higher competitiveness in industries located close to the former cutoff. This boosts demand for intermediates and thus reduces equilibrium unemployment. To the best of my knowledge, this paper is the first focusing on the unemployment effects of global sourcing in a model with a continuum of industries from both an empirical and a theoretical perspective. Lin and Wang (2008) present empirical evidence on the effects of capital-outflows on equilibrium unemployment, but their analysis does not feature the distinction between inward and outward FDI. This distinction is crucial at least in the model presented in the theory section of this paper where the sign of the effect is different depending on whether a country is the receiving or the sending country. The empirical strategy is borrowed from Dutt et al. (2009), or Felbermayr, Prat, and Schmerer (2011b). Also closely related to this paper are two contributions by Mitra and Ranjan (2010) and Davidson, Matusz, and Shevchenko (2008) both focusing on the employment effects of outsourcing in trade models with search frictions. Mitra and Ranjan (2010)propose a two sector model with one input factor labor. In their model outsourcing decreases equilibrium unemployment. Outsourcing in Davidson et al. (2008) forces some of the high skill workers to search for jobs in the low skill sector. This stirs up job competition in the low skill sector and thus triggers a rise in unemployment. Bakhtiari (2012) focuses on the effects of offshoring on low-skilled wages. The model predicts that offshoring 0.5% of unskilled jobs is associated with a 0.3% rise in unskilled real wage. Kohler and Wrona (2010) highlight the existence of a non-monotonicity between offshoring and unemployment. They identify channels through which offshoring can affect demand for intermediates at the intensive and extensive margin. The two opposing effects lead to an outcome where the sign of the effect hinges on the level of offshoring. Also closely related is an emerging literature on the labor market effects of globalization. Brecher's (1974) seminal paper about the labor market effects of a minimum wage in the Heckscher Ohlin model can be seen as a foundation for a large and emerging literature about the employment effects of globalization. Davidson et al., 1988 and Davidson et al., 1999 incorporated the Pissarides search and matching framework into a Heckscher Ohlin type of trade model. Moore and Ranjan (2005) investigate the link between trade liberalization and skill-specific unemployment in such an extended Heckscher Ohlin framework. More recently the spotlight has been directed towards the popular Melitz (2003) international trade model. Egger and Kreickemeier (2009) show how rent-sharing with heterogeneous firms that pay fair wages helps to explain the residual wage inequality and the so-called exporter wage premium. Trade liberalization in their approach increases wage inequality. Helpman and Itskhoki (2010) and Felbermayr, Prat, and Schmerer (2011a) analyze potential employment effects in a heterogeneous firms model with search frictions. Based on their earlier study, Helpman et al., 2010a and Helpman et al., 2010b investigate the effects of globalization on wage inequality and unemployment when workers and firms are heterogeneous.

This paper advances a simple multi-industry trade model a là Dornbusch et al. (1977) or Feenstra and Hanson, 1996 and Feenstra and Hanson, 1997 with imperfect labor markets due to Mortensen and Pissarides (1994) type of search frictions. Wages in this setup are jointly determined by labor market institutions and international trade, thereby affecting the equilibrium rate of unemployment at the intensive and extensive margin of labor demand. This two-dimensional causality between foreign direct investments and wages (unemployment) also permits the study of changes in the exogenously given labor market institutional environment. Institutions itself remain unaffected by firm behavior or trade so that wages are set according to the conditions in the labor market. Conversely, policy makers may influence labor market outcomes by readjusting labor market institutions. The model proposed above suggests that such a reform would necessarily affect trade, wages and unemployment in all countries integrated through trade in goods and capital. The paper's major contribution is to test and to quantify the opposing effects at the intensive and extensive margin of labor demand by confronting the model with data taken from the OECD. The main hypothesis derived in the theory chapter is that FDI-receiving countries tend to have lower rates of unemployment, whereas an increase in FDI-outflows increases equilibrium unemployment. The model can be used to address many questions related to trade, labor market institutions, foreign direct investment and unemployment. Relaxing the strict assumption of homogeneous labor for instance would give rise to inequality. Thus, trade and foreign direct investment would shape the observable income distribution that arises due to different skills of workers employed by different types of intermediate good producers. Schmerer (2012) discusses skill-biased institutional changes in such a framework. Introducing worker heterogeneity would also enable us to study the effects of FDI and outsourcing on the sorting of heterogeneous firms into the continuum of industries that differ with respect to labor requirement.7 The newly introduced Mortensen and Pissarides (1994) search and matching mechanism within the Feenstra and Hanson model also opens a novel channel through which changes in the workers' wage rate initiated by changes in labor market reforms induce capital flows between the integrated countries.8 For exogenous interest rates, a loss in competitiveness due to the labor market reform would lead to excess capital supply in the contracting and excess-demand in the expanding country. A more involved model extension that features imbalanced trade in a setup with at least two periods may be used to study the role of labor market institutions on imbalanced trade through shifts in competitiveness between different countries. Most interesting may be an extension of the empirical analysis. The model already features some interaction between foreign direct investment, outsourcing, and unemployment. Trade in intermediates is one crucial assumption in the model, which could be discussed in more details. Especially, interesting would be an extension where trade in intermediates incurs transportation costs. One may study the interaction between transportation costs of trade in intermediates, labor market institutions, and FDI. Moreover, the channel could be tested using the same data as employed in this paper.