Do Foreign Investors Care About Labor Market Regulations?
The authors take a new look at the regulatory determinants of foreign direct investment (FDI) by asking whether labor market flexibility affects FDI flows across 25 Western and Eastern European countries. Their analysis is based on firm level data...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/04/3565779/foreign-investors-care-labor-market-regulations http://hdl.handle.net/10986/14298 |
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okr-10986-142982021-04-23T14:03:20Z Do Foreign Investors Care About Labor Market Regulations? Spartareanu, Mariana Smarzynska Javorcik, Beata ABATEMENT COSTS ACCOUNTING CAPITAL FLOWS CORRUPTION DEVELOPMENT INDICATORS ECONOMIC ACTIVITY ECONOMIC PERSPECTIVES ECONOMIC REVIEW EMPIRICAL ANALYSIS EMPLOYMENT ENVIRONMENTAL STANDARDS EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE CONTROLS FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SUBSIDIARIES FOREIGN SUBSIDIARY GOVERNANCE INDICATORS GOVERNMENT REGULATIONS INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY RIGHTS INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL INVESTMENT INTERNATIONAL TRADE INVESTMENT CLIMATE INVESTMENT FLOWS INVESTMENT INCENTIVES INVESTMENT INFLOWS INVESTMENT LOCATION LABOR COSTS LABOR MARKET LABOR MARKET FLEXIBILITY LABOR MARKET REGULATIONS LABOR MARKET RIGIDITIES LABOR MARKETS LAWS LEGISLATION MARKET SIZE MULTINATIONAL COMPANIES POLICY RESEARCH POLLUTION POLLUTION ABATEMENT PROPERTY RIGHTS SUBSIDIARIES SUBSIDIARY TAX RATE TAX RATES TAXATION TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPARENCY FOREIGN DIRECT INVESTMENT LABOR MARKETS FOREIGN INVESTORS INVESTORS LABOR LAWS LABOR REGULATIONS BUSINESS FINANCING LABOR INFORMATION COLLECTIVE ACTIONS SEVERANCE PAYMENTS TRANSITION ECONOMIES SERVICES The authors take a new look at the regulatory determinants of foreign direct investment (FDI) by asking whether labor market flexibility affects FDI flows across 25 Western and Eastern European countries. Their analysis is based on firm level data on new investments during the 1999-2001 period. The authors employ a variety of labor market flexibility measures that capture different aspects of labor laws along with a comprehensive set of controls for business climate characteristics. Indices of labor market regulations reflect the flexibility of individual and collective dismissals, the length of the notice period, and the required severance payment. The results suggest that greater flexibility in the host country's labor market relative to that in the investor's home country is associated with larger FDI inflows, and this effect is found to be stronger in the case of transition economies. The findings indicate that as the labor market flexibility in the host country increases from inflexible (for example, Slovakia) to flexible (for example, Hungary), the volume of investment increases by between 14 and 18 percent. FDI in service sectors appears to be more affected than investments in manufacturing. 2013-07-01T15:11:44Z 2013-07-01T15:11:44Z 2004-04 http://documents.worldbank.org/curated/en/2004/04/3565779/foreign-investors-care-labor-market-regulations http://hdl.handle.net/10986/14298 English en_US Policy Research Working Paper;No.3275 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ABATEMENT COSTS ACCOUNTING CAPITAL FLOWS CORRUPTION DEVELOPMENT INDICATORS ECONOMIC ACTIVITY ECONOMIC PERSPECTIVES ECONOMIC REVIEW EMPIRICAL ANALYSIS EMPLOYMENT ENVIRONMENTAL STANDARDS EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE CONTROLS FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SUBSIDIARIES FOREIGN SUBSIDIARY GOVERNANCE INDICATORS GOVERNMENT REGULATIONS INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY RIGHTS INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL INVESTMENT INTERNATIONAL TRADE INVESTMENT CLIMATE INVESTMENT FLOWS INVESTMENT INCENTIVES INVESTMENT INFLOWS INVESTMENT LOCATION LABOR COSTS LABOR MARKET LABOR MARKET FLEXIBILITY LABOR MARKET REGULATIONS LABOR MARKET RIGIDITIES LABOR MARKETS LAWS LEGISLATION MARKET SIZE MULTINATIONAL COMPANIES POLICY RESEARCH POLLUTION POLLUTION ABATEMENT PROPERTY RIGHTS SUBSIDIARIES SUBSIDIARY TAX RATE TAX RATES TAXATION TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPARENCY FOREIGN DIRECT INVESTMENT LABOR MARKETS FOREIGN INVESTORS INVESTORS LABOR LAWS LABOR REGULATIONS BUSINESS FINANCING LABOR INFORMATION COLLECTIVE ACTIONS SEVERANCE PAYMENTS TRANSITION ECONOMIES SERVICES |
| spellingShingle |
ABATEMENT COSTS ACCOUNTING CAPITAL FLOWS CORRUPTION DEVELOPMENT INDICATORS ECONOMIC ACTIVITY ECONOMIC PERSPECTIVES ECONOMIC REVIEW EMPIRICAL ANALYSIS EMPLOYMENT ENVIRONMENTAL STANDARDS EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE CONTROLS FOREIGN FIRMS FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN SUBSIDIARIES FOREIGN SUBSIDIARY GOVERNANCE INDICATORS GOVERNMENT REGULATIONS INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY RIGHTS INTERMEDIATE INPUTS INTERNATIONAL ECONOMICS INTERNATIONAL INVESTMENT INTERNATIONAL TRADE INVESTMENT CLIMATE INVESTMENT FLOWS INVESTMENT INCENTIVES INVESTMENT INFLOWS INVESTMENT LOCATION LABOR COSTS LABOR MARKET LABOR MARKET FLEXIBILITY LABOR MARKET REGULATIONS LABOR MARKET RIGIDITIES LABOR MARKETS LAWS LEGISLATION MARKET SIZE MULTINATIONAL COMPANIES POLICY RESEARCH POLLUTION POLLUTION ABATEMENT PROPERTY RIGHTS SUBSIDIARIES SUBSIDIARY TAX RATE TAX RATES TAXATION TRANSITION COUNTRIES TRANSITION ECONOMIES TRANSPARENCY FOREIGN DIRECT INVESTMENT LABOR MARKETS FOREIGN INVESTORS INVESTORS LABOR LAWS LABOR REGULATIONS BUSINESS FINANCING LABOR INFORMATION COLLECTIVE ACTIONS SEVERANCE PAYMENTS TRANSITION ECONOMIES SERVICES Spartareanu, Mariana Smarzynska Javorcik, Beata Do Foreign Investors Care About Labor Market Regulations? |
| relation |
Policy Research Working Paper;No.3275 |
| description |
The authors take a new look at the
regulatory determinants of foreign direct investment (FDI)
by asking whether labor market flexibility affects FDI flows
across 25 Western and Eastern European countries. Their
analysis is based on firm level data on new investments
during the 1999-2001 period. The authors employ a variety of
labor market flexibility measures that capture different
aspects of labor laws along with a comprehensive set of
controls for business climate characteristics. Indices of
labor market regulations reflect the flexibility of
individual and collective dismissals, the length of the
notice period, and the required severance payment. The
results suggest that greater flexibility in the host
country's labor market relative to that in the
investor's home country is associated with larger FDI
inflows, and this effect is found to be stronger in the case
of transition economies. The findings indicate that as the
labor market flexibility in the host country increases from
inflexible (for example, Slovakia) to flexible (for example,
Hungary), the volume of investment increases by between 14
and 18 percent. FDI in service sectors appears to be more
affected than investments in manufacturing. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Spartareanu, Mariana Smarzynska Javorcik, Beata |
| author_facet |
Spartareanu, Mariana Smarzynska Javorcik, Beata |
| author_sort |
Spartareanu, Mariana |
| title |
Do Foreign Investors Care About Labor Market Regulations? |
| title_short |
Do Foreign Investors Care About Labor Market Regulations? |
| title_full |
Do Foreign Investors Care About Labor Market Regulations? |
| title_fullStr |
Do Foreign Investors Care About Labor Market Regulations? |
| title_full_unstemmed |
Do Foreign Investors Care About Labor Market Regulations? |
| title_sort |
do foreign investors care about labor market regulations? |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/04/3565779/foreign-investors-care-labor-market-regulations http://hdl.handle.net/10986/14298 |
| _version_ |
1764430152075313152 |