Employment of MNEs in Japan: New Evidence

This paper asks two questions. 1) Do multinational enterprises (MNEs) present different patterns of employment from domestic firms? 2) Do workers in MNEs face a higher risk of losing jobs? We distinguish two types of MNEs (i.e., Japanese MNEs and foreign-owned firms) and utilize firm-level data in Japan between 1995 and 2000. It was true that the net job destruction of Japanese MNEs was larger than those of foreign-owned firms and domestic firms. However, this negative employment growth is attributable not to rapid job destruction but to slow job creation. Second, workers in Japanese MNEs and foreign-owned firms did not face a higher risk of losing jobs than did those in domestic firms. This finding contradicts the findings of Barba Navaretti, Turrini, and Checchi (2003) but is consistent with the firm-specific skill hypothesis of Fukao and Otaki (1993). Japanese MNEs and foreign-owned firms might invest heavily in job training, which results in their lower employment volatility.