She received funding from A Sustainable Future (ASF) to obtain microdata from Statistics Netherlands to study how multinational enterprises (MNEs) affect domestic employees.

Motivation from municipality elections

My interest in MNEs and their effect on labour market is inspired from local politics. One of the points on the political agenda in the 2022 Amsterdam municipal elections was whether Amsterdam should make an effort to attract more international companies. Being a labour economist, I naturally thought about the consequences for the labour market.. It turns out that this question has been scarcely studied, but the Netherlands provides an ideal setting. First, it’s an attractive place for MNEs, given the geopolitical position and fiscal benefits. Additionally, there is detailed administrative data available that makes it possible to study this research question.

Local impact of globalisation

In this project, I’m asking ‘How does the presence of MNEs affect employment and wages in the Netherlands?’ I also want to identify the channels through which these effects develop. Multinational firms operate establishments in several locations (countries). Typically, they are more productive and larger in terms of personnel and revenue compared to domestic firms. The number and scope of operation of those enterprises has been increasing worldwide and in the Netherlands. That’s why it’s important to understand how those enterprises affect local unemployment, wages, and firms. Are local firms competing with MNEs for workers or can they reap positive (learning) effects from MNE presence?

What drives the effect of MNEs on domestic workers?

So far, 2 studies have found a positive effect of MNEs on domestic workers, in the US and Costa Rica. Wages of employees in domestic firms grow faster in local labour markets where more MNEs are active. In my research, I want to investigate further and find out why these effects arise. Possible explanations include an increased labour demand due to MNEs and wage competition with local firms Positive spillover (learning effects) is also another possibility.

There are potential positive effects on domestic workers when:

• There are positive spillovers (learnings from MNEs), and the presence of MNEs makes domestic workers more effective and hence they receive a higher salary.
• More workers are demanded in the local labour market and with additional labour demand, so wages rise.
• MNEs engage in 'poaching' (hiring from domestic firms) and therefore domestic firms increase their wages to retain workers.

In my research I also offer an additional explanation of how MNEs have an impact: they have easier access to the foreign labour market and can hire (part of) their labour force from abroad.

Progress and preliminary results

This research project is progressing well, and I hope to have robust results by the end of the year. These results contribute to a deeper understanding of the labour market effects of MNEs. What’s more, this is relevant to gaining a more nuanced picture of the labour market impact of MNEs. The results can be used by policy-makers as well. From the preliminary results, it seems that MNEs affect wages of domestic workers positively. Labour demand and positive spillover-effects appear to be roughly equal.

ASF funding for data

I use very detailed administrative micro data from Statistics Netherlands (CBS), containing information from all employees and firms in the Netherlands. This data allows me to track every worker across firms and time. I was able to make accurate empirical conclusions about my research question. It goes without saying that the data is confidential and anonymised. But data-provision is costly. The grant from ASF allowed me to fund my project and follow this research interest.