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Austrian FDI in Central-Eastern Europe and Employment in the Home Market

This paper investigates the impact of Austrian foreign direct investment on domestic employment in five new EU member states from Central and Eastern Europe (NMS5). We estimate both a static and a dynamic labour demand model using sector data for the period 1993-2004 where domestic employment depends on value added, real wage, the net capital stock and time effects. In particular, we investigate the potential complementary/ substitutive relationship between domestic and foreign affiliate employment of Austrian multinationals, disaggregated by two partner regions (that is, EU15 and NMS5). Estimates obtained using the static fixed-effects model show that domestic employment effects of foreign ...

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