Relationship between Overseas and Domestic Employment: An empirical analysis of Japanese multinational manufacturing firms

This paper uses overseas and domestic employment data of Japanese multinational manufacturing firms to verify the "hollowing-out of the domestic industry" hypothesis. Taking advantage of the rich micro-level data sets conducted by the Ministry of Economy, Trade and Industry ("Basic Survey of Japanese Business Structure and Activities" and "Basic Survey on Overseas Business Activities"), this paper calculates the exogenous macroeconomic shocks to increase overseas employment and analyzes the effects of these shocks on domestic employment. The results are summarized as follows. First, we reveal that the number of employees in the home country has a positive correlation with the number of overseas employees. However, the macroeconomics shocks to increase the number of overseas employees has an insignificant effect of reducing the number of employees in the home country.