International Rent Sharing and Domestic Labour Markets: A Macroeconomic Analysis |
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Authors: | W Jos Jansen Ad C J Stokman |
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Institution: | (1) Ministry of Social Affairs and Employment, The Hague, The Netherlands;(2) Economics and Research Division, De Nederlandsche Bank, P.O. Box 98, 1000 AB Amsterdam, The Netherlands |
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Abstract: | Compared to international trade relations relatively little is known about the role foreign direct investment linkages play
in the transmission of disturbances from one country to the next. Inspired by the microevidence on profit sharing within multinational
corporations and within industries, we investigate for six countries whether a cross-border rent-sharing phenomenon can be
identified at the macroeconomic level. The rent-sharing hypothesis implies that an increase in foreign profitability should
boost wages and/or employment in the domestic economy. We find corroborative evidence for Belgium, France, Germany, the Netherlands
and the United Kingdom. US labour market conditions, by contrast, are not affected by changes in profitability in other countries.
JEL no. E32, F23, F40, J23, J31 |
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Keywords: | Foreign direct investment international rent sharing labour markets economic integration |
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