Multinationals, Intrafirm Trade, and Employment Volatility

         
Author Name HIGUCHI Yoshio (Keio University) / KIYOTA Kozo (Research Associate, RIETI) / MATSUURA Toshiyuki (Keio University/KU Leuven)
Creation Date/NO. September 2016 16-E-087
Research Project Microeconometric Analysis of Firm Growth
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Abstract

This paper examines the theoretically ambiguous relationship between the volatility of employment growth and the foreign exposure of a firm. We use unique firm-level data for Japan for the period 1994-2012, which allow us to examine the differences between 1) multinational firms, trading firms, and nontrading firms; 2) manufacturing and wholesale and retail trade; and 3) intrafirm and interfirm trade. One of the major findings is that, in manufacturing, the effect of exports on the volatility of employment varies depending on the share of intrafirm exports to total sales. In contrast, in wholesale and retail trade, exports do not have significant effects on employment volatility. The results suggest that intrafirm trade transmits the effects of foreign demand and supply shocks differently between manufacturing and wholesale and retail trade.