CANCELLED EVENT: Dorieann Fitzgerald: The Impact of Multinationals Along the Job Ladder

THIS EVENT HAS BEEN CANCELLED.

The Moynihan Institute’s program for Trade, Development and Political Economy presents a talk by Doireann Fitzgerald, senior research economist, Federal Reserve Bank of Minneapolis.

There is a lot of evidence that multinational affiliates are more productive than local firms. Given this, what is the impact of their presence on local workers and firms through interactions in the labor market?

We use matched employer-employee data for Norway to show that the labor market is characterized by a job ladder, and that multinational affiliates are located on the upper rungs of this ladder. We build a general equilibrium job ladder model with endogenous entry of multinational affiliates and calibrate the model to match key moments from the Norwegian data.

Our calibration matches the greater size of multinational affiliates through a productivity distribution that has a thicker right tail than that for domestic establishments. We use the calibrated model to perform a counterfactual where multinationals face an infinite entry cost.

Multinational presence increases output and the total wage bill in the economy. However wage inequality also increases. Competition for workers on the upper rungs of the job ladder becomes more intense, while the intensity of competition low down on the job ladder declines. Multinational presence also leads to higher unemployment as workers become more picky about the jobs they accept. Finally, multinational presence reduces aggregate profits of local firms.

Doireann Fitzgerald joined the Federal Reserve Bank of Minneapolis as a senior economist in 2013. She has also been an assistant professor at Stanford University and the University of California–Santa Cruz. Doireann received a B.A. and M.A. in economics from University College Dublin and a Ph.D. in economics from Harvard University.

She has been a visiting assistant professor at Harvard (2005–6) and a Fellow in the International Economics Section at Princeton University (2010–11). Her work has appeared in the Journal of International Economics, the Journal of Monetary Economics, and the American Economic Review. Her main area of interest is international economics.