| |
N° 2008-12 |
  |
| July 2008 |
| Social Competition and Firms' Location Choices |
Vincent Delbecque
Isabelle Méjean
Lise Patureau |
|
The paper evaluates the empirical effect of labor market institutions on foreign direct investment
(FDI) decisions. To that aim, a firm-level dataset is used, that describes French firms’ expansion strategies abroad over the 1992-2002 period. Following Head and Mayer (2004b),
the determinants of individual FDI decisions are estimated by implementing a discrete choice
model on all possible foreign locations. The estimated equation is derived from a partialequilibrium
model combining elements of the new economic geography literature and the labor
market literature.
We find that labor market institutions do impact French firms’ location decisions. Our overall
results suggest that labor market rigidity puts a brake on the host country’s attractiveness. More
detailed analysis shows that the estimated effects depend on the sample of countries considered
as potential locations. French firms are found to be much more sensitive to the design of
labor market institutions when FDI decisions take place within the set of industrialized OECD
countries. |
Non-technical summary |
|
Résumé
non-technique
en français |
|
| Full text |
| |
|
| Labor market institutions; foreign direct investment determinants; firm-level data |
Keywords |
| F16; F21; J3 |
JEL classification |
| |
|
| To visualise the full text document, use Acrobat
Reader |
|
|
|
| |
|
|
|
|
