Discussion Paper

No. 2019-42 | July 12, 2019
Direct and indirect impacts of liberal immigration policies on the inflow of multinationals in the U.S.

Abstract

Many studies suggest that stringent labor protection and higher labor costs in host countries can limit foreign direct investment. This implies that foreign firms are sensitive to the flexibility of the labor market in the U.S. The U.S. has experienced increasing immigrants, which have preserved the stable labor supply in the U.S. market. The U.S. is a good case to test the relationship between immigration and FDI because the U.S. is not only the largest host and home country of FDI but also the country that has one of the highest immigrant populations and experiences a significant reduction in labor supply and an increase in the minimum cost of labor. Utilizing a time-series analysis from 1970 to 2016, this study suggests that the expansive immigration policies directly increase FDI inflows in the U.S., and indirectly increase FDI inflows throughout lowering potential labor costs and securing a stable labor supply.

Data Set

JEL Classification:

F16, J15

Assessment

  • Downloads: 198

Links

Cite As

Geiguen Shin (2019). Direct and indirect impacts of liberal immigration policies on the inflow of multinationals in the U.S. Economics Discussion Papers, No 2019-42, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2019-42


Comments and Questions


Anonymous - Referee Report 1
August 15, 2019 - 11:19

See attached file


Geiguen Shin - Reply to Referee Report 1
October 21, 2019 - 09:41

see attached file


Anonymous - Referee Report 2
September 26, 2019 - 16:30

See attached file


Geiguen Shin - Reply to Referee Report 2
October 31, 2019 - 12:18

Thank you for your insightful comments and suggestions. I hope this response sufficiently addresses your concerns. If you have any questions and comments, please feel free to let me know.