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We observe total multinational employment in the BEA data, and then calculate nonmultinational employment as a residual, subtracting multinational employment from total industry employment measured using County Business Patterns data. Table 7, columns 1 and 2, show that domestic employment in multinational firms increases in response to growth in affiliate employment. This is simply the industry-level analogue of the parent-level effect in table 5. In contrast, the effects on industry-level nonmultinational employment in columns 3 and 4 are extremely small and statistically indistinguishable from 0, implying that nonmultinational firms do not share in the employment growth of multinational firms when the costs of offshore employment fall.

Table 7.

U.S. Industry Level Analysis: The Effect of Offshore Employment on U.S. MNE versus Non-MNE Employment

Dependent Variable: Log Industry Employment—ln(Lit)
(1)(2)(3)(4)
SpecificationIVIVIVIV
SampleMNEMNEnon-MNEnon-MNE
industry log affiliate 0.042*** 0.043*** 0.0009 −0.001 
employment: (lnMit(0.005) (0.005) (0.004) (0.005) 
ln(GDPus+GDPd)  0.097  −0.036 
  (0.093)  (0.046) 
ln(GDPus-GDPd)2  −0.048  0.015 
  (0.048)  (0.024) 
ln(SkillDifference)  −0.06  0.015 
  (0.037)  (0.022) 
ln(TradeCosts)  −0.006  0.011 
  (0.007)  (0.009) 
BIT  0.047  −0.009 
  (0.066)  (0.026) 
FTA  0.06  0.015 
  (0.036)  (0.016) 
Exchange Rate  −0.00002  −0.00001 
  (0.000)  (0.000) 
Industry FE YES YES YES YES 
Year FE YES YES YES YES 
N 1,268 1,268 1,268 1,268 
R-squared 0.2678 0.3086 0.4244 0.4702 
First-Stage F-Statistic 276.32 205.84 214.75 189.12 
Endogenous Test p-Value 0.0089 0.0052 0.0198 0.0187 
Dependent Variable: Log Industry Employment—ln(Lit)
(1)(2)(3)(4)
SpecificationIVIVIVIV
SampleMNEMNEnon-MNEnon-MNE
industry log affiliate 0.042*** 0.043*** 0.0009 −0.001 
employment: (lnMit(0.005) (0.005) (0.004) (0.005) 
ln(GDPus+GDPd)  0.097  −0.036 
  (0.093)  (0.046) 
ln(GDPus-GDPd)2  −0.048  0.015 
  (0.048)  (0.024) 
ln(SkillDifference)  −0.06  0.015 
  (0.037)  (0.022) 
ln(TradeCosts)  −0.006  0.011 
  (0.007)  (0.009) 
BIT  0.047  −0.009 
  (0.066)  (0.026) 
FTA  0.06  0.015 
  (0.036)  (0.016) 
Exchange Rate  −0.00002  −0.00001 
  (0.000)  (0.000) 
Industry FE YES YES YES YES 
Year FE YES YES YES YES 
N 1,268 1,268 1,268 1,268 
R-squared 0.2678 0.3086 0.4244 0.4702 
First-Stage F-Statistic 276.32 205.84 214.75 189.12 
Endogenous Test p-Value 0.0089 0.0052 0.0198 0.0187 

Documents the effects of BTT-induced changes in foreign-affiliate employment at the industry level for industries that exhibit high ratios of royalty, interest, and dividend payments relative to total industry sales. Columns 1 and 2 examine employment for multinational parents in the U.S. industry, while columns 3 and 4 examine all other employment in each industry. First-stage F-statistics are large for all IV specifications, though the relevant F-statistics for weak-instrument concerns appear in columns 2 and 5 of table 4 (see text for discussion). In all IV specifications, the equality of OLS and IV is rejected. Sample covers 1987--2007. Standard errors clustered by industry and year are in parentheses. Significant at *10%, **5%, and ***1%.

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