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Research Article

Does FDI increase labour market volatility at home?

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ABSTRACT

This article examines the effect of outbound FDI on labour market volatility and, thereby, on economic insecurity in home countries of FDI distinguishing between greenfield FDI (GFDI) and cross-border mergers and acquisitions (M&A). Using the data up to 94 countries during the period 2003–2019, we find that outward GFDI stimulate economic insecurity by increasing volatility of employment. Cross-border M&A purchases, however, decrease the labour market volatility measured both in terms of volatility of employment and hours worked.

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Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Surprisingly, there is no available literature comparing the effects of modes of FDI on elasticity of labour demand. Further, there is little/no guidance on how FDI modes of exit affect labour market volatility. However, based on the characteristics, we assume that it is mainly GFDI that have stronger effects on labour market volatility and economic insecurity.

7 Results are largely consistent.

8 For system GMM application and robustness, see Doytch and Uctum (Citation2011).

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