The effect of multinational companies on the employment volatility of China

摘要

Millions of Chinese workers temporally or permanently lost their jobs due to the negative shock of 2008 crisis on FDI or FDI related business. The situation warns us that we need to care about the effect of multinational enterprises on the employment volatility of China. Based on industry level data, this paper studies the relationship between the amount and the share of FDI in the industry's capital composition and the employment fluctuation. Our regression results show that in labor intensive industry, the regions with greater investment from oversea Chinese or higher share of capital from oversea Chinese tend to have higher employment volatility. But in capital intensive industry, the regions with greater investment from foreigners or higher share of capital from foreigners tend to have lower employment volatility. These results have important implications for making China's specific industrial FDI policies.