Are U.S. Multinationals Exporting U.S. Jobs?

S. Lael Brainard, David A. Riker

NBER Working Paper No. 5958
Issued in March 1997
NBER Program(s):   ITI

Many allege multinationals are exporting' U.S. jobs when they expand operations abroad. This paper investigates the extent to which expansion of offshore production by U.S. multinationals reduces labor demand at home and at other offshore locations, using a panel on U.S. multinationals and their foreign affiliates between 1983 and 1992. The results suggest that foreign affiliate employment substitutes modestly at the margins for U.S. parent employment. There is much stronger substitution between workers at affiliates in alternative low wage locations. In contrast, activities performed by affiliates at locations with different workforce skill levels in the same region appear to be complements. The results suggest a vertical division of activities among countries with different workforce skill levels, where workers in developing countries compete with each other to perform the activities most sensitive to labor costs. When wages in developing countries, such as Mexico, fall 10 percent, U.S. parent employment falls 0.17 percent, while affiliates in other developing countries, such as Malaysia, lay off 1.6 percent of their workforce.

download in pdf format
   (1147 K)

email paper

An NBER digest for this paper is available.

A non-technical summary of this paper is available in the NBER Bulletin on Aging and Health. You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5958

Users who downloaded this paper also downloaded* these:
Harrison and McMillan w12372 Outsourcing Jobs? Multinationals and US Employment
Riker and Brainard w5959 U.S. Multinationals and Competition from Low Wage Countries
Lipsey Home- and Host-Country Effects of Foreign Direct Investment
Blomstrom, Fors, and Lipsey w6205 Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden
Brainard w4269 A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us