LOCATION FACTORS FOR MULTINATIONALS: WHICH ROLE FOR THE SKILL DISTRIBUTION OF EMPLOYMENT?

1. LOCATION FACTORS FOR MULTINATIONALS: WHICH ROLE FOR THE SKILL DISTRIBUTION OF EMPLOYMENT? by N. Elif KÖKSAL-OUDOT OECD Comments by Marina Rybalka Statistics Norway

2. Summary • Analyses the location choice factors of multinationals in OECD countries over the 1997-2007 period • Focuses on the link between location decision by multinationals and the skill distribution of employment in the host country • Tests two skill proxies, i.e. educational attainment and occupation • Uses two proxies for the presence of foreign affiliates, i.e. number of foreign affiliates and labour productivity of foreign affiliates • Find the indication on that availability of high-skilled workers is an important factor for the location decision of multinationals • Other important factors • Openness of the country (export+import)/GDP • Foreign attractiveness FDI/GDP • Scaled number of patents granted to the foreign inventors Marina Rybalka, Statistics Norway

3. Questions on the skill proxies • Both proxies are assessed on the labour force, not on the adult population, neither on students. • What is a definition of adult population? • Just age? Different countries have different pension age. • What is if a pensioner is a part-time worker? • More skilled if occupation is used as a proxy (two times more in Slovak Republic, 127 % more in Italy and 145 % more in Czeck Republic). • Any ideas for the combination of these two proxies? • For US and Japan: Decrease in the share of high-skilled workers in high and medium-high technology industries, i.e., in machinery (ISIC29) and post and telecommunication sector (ISIC64) in 1998-2008. • Any intuition behind this trend? Marina Rybalka, Statistics Norway

4. Questions on FDI descriptives • Comparing information on foreign affiliates’ activities in manufacturing and services: • The employment shares in manufacturing are equal or higher than in services in almost in all countries • Labour productivity levels (VA per employee) are also higher in manufacturing in most of the countries. But! Marina Rybalka, Statistics Norway

5. Marina Rybalka, Statistics Norway

6. Marina Rybalka, Statistics Norway

7. Comments on the empirical part • All variables are in the shares or scaled by the country size (by GDP or population), but the number of foreign affiliates is not. WHY? Marina Rybalka, Statistics Norway

8. Comments on the empirical part • The analysis of number of foreign affiliates includes some input variables that highly correlated • relative value added and relative wage • indicator for openness of country and indicator foreign attractiveness Marina Rybalka, Statistics Norway

9. Comments on the empirical part • When analysing labour productivity of foreign affiliates, finds significant and positive effect of relative wage rate • The wage rate is strongly influenced by productivity of the employees and hence by the productivity of the whole company. Reverse effects. Marina Rybalka, Statistics Norway

10. Comments on the empirical part • In the analysis of labour productivity of foreign affiliates with education as proxy for skills, coefficients are positive and significant for both high-skilled and medium-skilled, but lower for the former. • Any clue why is that? Marina Rybalka, Statistics Norway

11. Thank you for the interesting paper! Marina Rybalka, Statistics Norway