Hitotsubashi Institute for Advanced Study


Hollowing Out or Filling In?
Impacts of Multinational Enterprises on Domestic Plant Turnover and Job Growth in Factory Asia


Recently multinational enterprises (MNEs) originating from Asian countries such as China and Korea have rapidly expanded their global operations, but the employment effect of these MNEs in their home countries has rarely been studied. Using Korean firm-plant matched data over 2008-2013, we examine the effects of MNEs on domestic plant turnover and job growth. We find that Korean MNEs are more likely than non-MNEs to not only close down their domestic manufacturing plants but also open new plants. Along with active plant turnover, Korean MNEs exhibit greater active job reallocation across their domestic manufacturing plants within firms; however, this does not result in net job loss. This suggests that Korean MNEs participating in Factory Asia restructured their domestic manufacturing bases rather than hollowing them out.

Report No.: HIAS-E-71
Author(s): Hyundai Chun(a)
Jung Hur(a), (b)
Nyeong Son Son(a)
Affiliation: (a) Department of Economics, Sogang University, 35 Baekbeom-ro, Mapo- gu, Seoul 04107, Korea
(b) Hitotsubashi Institute for Advanced Study, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo 186-8601 Japan
Issued Date: June 2018
Keywords: Employment, Job Reallocation, Multinational Enterprise, Plant Birth, Plant Death
JEL: F23, F66, L23