Michael Moritz

Labor Market Effects of Trade and FDI: Recent Advances and Research Gaps

Summary The last decade has been shaped by dramatic developments in international trade, international investment and production, both in terms of the scale of events and in terms of their qualitative nature. Intriguing questions have been thrown up concerning the labor market impact of these developments, notably welfare issues (the evolution of real wages, employment and unemployment), the distribution of income (the wage structure) and employment volatility. Path-breaking innovations in the theories of trade, location and the multinational firm allow a fresh look at these labor market effects. This paper takes stock of these theoretical innovations and contrasts these with the recent empirical research efforts to uncover the labor market implications of trade and FDI. We identify research gaps and highlight promising avenues for future research.

Labor Market Effects in the German-Czech Border Region: An Empirical Study Using the IAB Employment Sample (IABS)

Abstract Using the IAB Employment Sample (IABS) covering 1980–2001, we investigate what impact the fall of the Iron Curtain has had on the skill structure of employment and wages in the western German districts neighboring the Czech Republic. The introduction of free trade and capital mobility in this region, which has one of the worlds largest wage differentials, can be seen as a natural experiment. Even though full liberalization of the labor markets has not yet occurred, integration of product and capital markets should lead to significant shifts in economic activities. We presume that changes in skill and wage structures are particularly apparent in the regions situated immediately on the open border. Distinguishing three skill categories we obtain rather unexpected results. Though we observe a general shift from low‐skilled jobs towards skilled jobs and a convergence trend of border regions towards the national average, we do not find a special effect for the period after the opening of the border, neither concerning the skill structure nor the wage differentials.

Mothers and Daughters: Heterogeneity of German Direct Investments in the Czech Republic

Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLoc survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model dominates in manufacturing, while the horizontal model of investment prevails in the service sector.

Regional determinants of German FDI in the Czech Republic: new evidence on the role of border regions

ABSTRACT Regional determinants of German FDI in the Czech Republic: new evidence on the role of border regions. Regional Studies. Using a unique dataset, the regional distribution of German multinationals and their Czech affiliates is analysed. The investigation focuses on locational factors for joint foreign direct investment (FDI) projects that can only be revealed by taking a home-host country perspective. A light is shed on the strong position of the common border region and its asymmetric interconnectedness. While the Czech border region constitutes an attractive target area for investors from all over Germany, multinational firms in the German border region show a significant preference to invest in Czech regions close by, but not so in the non-border regions in the neighbouring country.