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 The Case against Foreign Direct Investment and Multinational Corporations

Stephen D. Cohen

in Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity

Only the most rabid proponents deny the potential for MNCs and FDI to inflict costs and harm on large numbers of people and countries. This chapter is the equivalent of a law brief, this time ... More

Only the most rabid proponents deny the potential for MNCs and FDI to inflict costs and harm on large numbers of people and countries. This chapter is the equivalent of a law brief, this time one-sidedly expounding on the merits of the opposite side of the case and offering a totally different perspective on how to evaluate FDI and MNCs. Once again, no effort is made to replicate the emphasis in earlier chapters on the need for a balanced, objective approach to a subject dominated by heterogeneity, complexity, and subjectivity. The downsides of MNCs and FDI are discussed in terms of their demonstrable threat to a country's overall economic growth and prosperity as the result of the inherent conflict between their single-minded pursuit of profits and the interests of the host country's population. More specific costs such as intimidation of government officials anxious to promote and retain inward FDI, bribing regulators, tax avoidance, reduced competition in the marketplace including price collusion, diminished union and worker negotiating leverage, increased pollution, and increased capital outflows in the form of profit remittances, are also discussed.Less

Financial Threats and Self-Undermining Rhetoric

Adam Seth Levine

in American Insecurity: Why Our Economic Fears Lead to Political Inaction

This chapter provides an overview of the book's main themes. This book examines the political consequences of threats to Americans' financial well-being and in particular why they might not motivate ... More

This chapter provides an overview of the book's main themes. This book examines the political consequences of threats to Americans' financial well-being and in particular why they might not motivate people to become politically active even though we have good reason to expect that they would. Such threats are collectively referred to as American insecurity—or, in some cases, simply economic insecurity. The book focuses primarily on four threats: involuntary job loss, health care costs, retirement, and higher education costs. These four by no means capture the full range of financial threats that Americans face, but they turn out to be particularly illuminating cases. Relative to many other issues that are often grouped under the label of “economic insecurity,” explaining political inaction on these four issues turns out to require a new theoretical approach.Less

Job Loss and the Decline in Job Security in the United States

Henry S. Farber

in Labor in the New Economy

This chapter discusses job loss and the decline in job security in the United States. It argues that a possible explanation for this scenario is an increase in the rate of job change by workers that ... More

This chapter discusses job loss and the decline in job security in the United States. It argues that a possible explanation for this scenario is an increase in the rate of job change by workers that is not captured by the Displaced Workers Survey (DWS). While job loss rates are lower in the public sector than in the private sector, and move with the business cycle in the private sector, there has been no secular increase in private-sector job loss rates that could account for the decline in private-sector job tenure. While overall rates of job loss did not increase, it is not the case that rates of job loss for high-tenure workers increased relative to those for lower-tenure workers. Some voluntary job change may reflect the kind of worker displacement that the DWS was meant to capture but is not reported as such by workers.Less

Job Loss: Historical Perspective from the Displaced Workers Survey, 1984–2010

Henry S. Farber

in Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health

This chapter provides a discussion of the incidence of job loss in the

Effects of Late-Life Job Loss on Wealth and Labor Supply

Ann H. Stevens and Jeremy G. Moulton

in Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health

This chapter considers the impact of job loss on economic well-being during retirement. Using data from the Health and Retirement Study (HRS), it compares retirement wealth across individuals who ... More

This chapter considers the impact of job loss on economic well-being during retirement. Using data from the Health and Retirement Study (HRS), it compares retirement wealth across individuals who experience a job loss and those who do not. Sizeable differences are reported, especially when the job loss occurs at young ages. Little evidence is found that displaced workers can make up these differences by shifting retirement to a later date. The inability to recover appears related to both the difficulty in becoming reemployed and, if a new job is found, working sufficiently long before retirement to offset the initial declines in assets.Less

The Effect of Job Displacement on Cumulated Years Worked

Till von Wachter, Jae Song, and Joyce Manchester

in Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health

This chapter considers whether short-term losses experienced by displaced workers persist over time by impacting the cumulative years that the typical individual works. Using administrative records ... More

This chapter considers whether short-term losses experienced by displaced workers persist over time by impacting the cumulative years that the typical individual works. Using administrative records from the Social Security Administration, the analysis finds that workers released in mass layoffs experience significant reductions in work activity in later life. Such reductions will naturally result in sizeable decreases in available resources both during working years and in preparedness for retirement. The authors conclude that job displacement is an extraordinary event in terms of its cumulative effect on availability of resources for individuals.Less

The New Global Apparel Trade: Who Wins, Who Loses?

Ellen Israel Rosen

in Making Sweatshops: The Globalization of the U.S. Apparel Industry

This chapter addresses the winners and the losers of the globalization of the apparel industry. Executives and managers of the large retail and apparel transnationals have clearly been winners, while ... More

This chapter addresses the winners and the losers of the globalization of the apparel industry. Executives and managers of the large retail and apparel transnationals have clearly been winners, while those who have been displaced from their jobs, mostly the women who now work in the industry's sweatshops are some of the losers. Job losses, wage reductions, and sweatshops are a result of “race to the bottom.” The dilemmas of globalization and the “new international division of labor” are then explained. The pressure to open new markets in lower and lower wage regions of the world has led to a Darwinian struggle, which is producing a race to the bottom. In general, it is hoped that this book will be part of a larger effort to ensure that a significant part of the new and emerging global labor force, women apparel workers, will be able to earn a living wage.Less

Involuntary Job Transitions and Subjective Well-Being

Ariel Kalil and Thomas DeLeire

in Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health

This chapter examines whether lasting reductions in earnings and wealth due to job loss have consequences on well-being beyond financial concerns. In particular, the analysis uses data from the ... More

This chapter examines whether lasting reductions in earnings and wealth due to job loss have consequences on well-being beyond financial concerns. In particular, the analysis uses data from the Health and Retirement Study (HRS) to examine the impact of job loss on two different measures of self-reported psychological well-being, one meant to capture life satisfaction and another that gauges a person's sense of purpose in life. The research indicates that job loss, independent of a variety of background factors, reduces satisfaction by roughly 25 to 50 percent and that self-assessments by individuals of their purpose in life also typically declines by roughly 15 percent. This work suggests that job loss takes a toll on the nonfinancial as well as the financial well-being of individuals.Less

Do Initial Conditions Persist between Firms?: An Analysis of Firm-Entry Cohort Effects and Job Losers Using Matched Employer-Employee Data

Till von Wachter and Stefan Bender

in The Analysis of Firms and Employees: Quantitative and Qualitative Approaches

An increasing number of studies suggest that the starting conditions in the first year of a worker's job or labor market entry can have long-term effects on earnings and career development. Using ... More

An increasing number of studies suggest that the starting conditions in the first year of a worker's job or labor market entry can have long-term effects on earnings and career development. Using data on the complete career histories of all workers in a large manufacturing sector in Germany, this chapter examines the prevalence and heterogeneity of firm-entry cohort effects for a large sample of firms over more than twenty years. To ensure that the cohort differences in wages are not due to selective entry of workers into firms, the chapter controls for observable firm and worker characteristics as well as worker fixed effects. In addition, it analyzes whether entry conditions fade within firms and whether firms' wages tend to converge to a common market wage over time. The chapter also looks at the effects of job displacement on wage changes for workers with high, medium, or low starting wages at the lost job. Finally, it discusses the impact of past wage premiums on the level of wages after job loss.Less

Unemployment and Unemployment Relief

George R. Boyer

in The Winding Road to the Welfare State

This chapter examines the extent of cyclical, seasonal, and casual unemployment from 1870 to 1914, and shows that reported unemployment rates greatly understate the probability of job loss faced by ... More

This chapter examines the extent of cyclical, seasonal, and casual unemployment from 1870 to 1914, and shows that reported unemployment rates greatly understate the probability of job loss faced by manual workers. It also reveals the public and private battles over relief for the unemployed. In the 1870s, cities abruptly curtailed granting outdoor relief to able-bodied males, and beginning in 1886 the Local Government Board encouraged municipalities to establish work relief projects during downturns. However, neither municipal relief projects nor the work relief established as a result of the 1905 Unemployed Workmen Act succeeded in assisting the temporarily unemployed—most of those employed on relief works were chronically underemployed laborers.Less

Business Employment Dynamics

Richard L. Clayton and James R. Spletzer

in Producer Dynamics: New Evidence from Micro Data

This chapter presents an overview of the Business Employment Dynamics (BED) database at the Bureau of Labor Statistics (BLS). It also provides a detailed analysis of job creation and destruction in ... More

This chapter presents an overview of the Business Employment Dynamics (BED) database at the Bureau of Labor Statistics (BLS). It also provides a detailed analysis of job creation and destruction in the 2001 recession and the subsequent years. It is observed that the relatively few establishments with large gross job gains and large gross job losses were the drivers of the 2001 recession. The declining net employment growth during the first three quarters of 2001 can be attributed to both falling gross job gains and rising gross job losses. Moreover, 64 percent of the net job losses in the most severe recessionary quarter are attributable to the relatively few establishments gaining or losing 20 or more jobs. It can be concluded that the BLS was able to create the BED data with no new data collection efforts and with no new additional respondent burden.Less

Finding and Maintaining Employment

David J. Harding, Jeffrey D. Morenoff, and Jessica J. B. Wyse

in On the Outside: Prisoner Reentry and Reintegration

The formerly incarcerated exhibit very low rates of employment, even many years after their release from prison. Low levels of human capital, distance from jobs, lack of transportation, and the ... More

The formerly incarcerated exhibit very low rates of employment, even many years after their release from prison. Low levels of human capital, distance from jobs, lack of transportation, and the stigma of a felony record explain the challenges of finding work after prison. Those who do find work do so through different strategies; applying for many jobs, leveraging social networks, and deploying cultural capital to counter the felony stigma, but many formerly incarcerated individuals do not have such resources. Their employment is concentrated in a small number of industries associated with the secondary labor market. Informal self employment is a common response. Those who found jobs outside the secondary labor market did so with material and social support from family. Yet employment is low among the formerly incarcerated also because they have high rates of job loss. Job losses stem from individual challenges like health problems, addiction relapse, family caretaking responsibilities, and transportation problems but also due to the nature of a contemporary low-skill labor market where turnover is high due to low wages and benefits few, frequent schedule changes, and abusive bosses.Less

Skills and education mismatch

Seamus McGuinness (ed.)

in Youth Employment: Style Handbook

This chapter addresses three key aspects of young people's lives: the nature of human capital development in third-level institutions; transitions from education to work; and the relative exposure to ... More

This chapter addresses three key aspects of young people's lives: the nature of human capital development in third-level institutions; transitions from education to work; and the relative exposure to employment mismatch and separation in employment. Young people are more likely to become unemployed but are also more likely to move from unemployment to employment. With respect to the individual characteristics that influenced labour market transitions, higher levels of schooling were a key factor affecting the likelihood of exiting unemployment to enter employment. The result suggests that young people's relative exposure to job loss is particularly high during recession. In terms of within-employment mismatch, the evidence indicates that while overeducation rates in Europe are converging upwards over time, the general pattern of overeducation is linked across many countries, suggesting that the phenomenon responds in a similar way to external shocks and, consequently, is likely to also react in similar ways to appropriate policy interventions.Less

Job Loss: A Discussion

Michael D. Hurd

in Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health

This chapter provides an overview of the section of the text that examines job loss. The main theme of the chapter is that since the Great Recession is more severe than the periods covered by some of ... More

This chapter provides an overview of the section of the text that examines job loss. The main theme of the chapter is that since the Great Recession is more severe than the periods covered by some of the data used in the individual analyses, they may understate the likely impacts of recent job losses. One particular area the discussion points towards as being different in the Great Recession is the depressed housing market. While prior recessions have resulted in both job loss and temporary declines in the equity markets, the extent of the negative impact of the Great Recession on housing equity is unusual. Housing is a major component of wealth for many families so a sharp decline implies fewer resources to react and adapt to job loss. Also, job loss itself often precedes home foreclosure.Less

Historical poverty and the roots of decline

Ruth Lupton

in Poverty Street: The dynamics of neighbourhood decline and renewal

This chapter explores the trajectories of poverty in more detail, highlighting the areas of primary deprivation. The decline had started in the 1960s due to the increase of crime and antisocial ... More

This chapter explores the trajectories of poverty in more detail, highlighting the areas of primary deprivation. The decline had started in the 1960s due to the increase of crime and antisocial behaviour, decline in the sense of community, and the loss of shops and services. Underlying these changes were three consistent themes: economic restructuring, resulting in every case in enormous job losses; widening inequality (driven in large part by economic changes); and changes in the size and composition of the population. It is shown that these changes led in an increase in the rate of poverty. Council-housing areas were developing the most entrenched poverty concentrations. By the beginning of the 1990s, poverty concentrations were acute and inequality was wide.Less

Job Tenure and Job Turnover

Giulia Faggio, Paul Gregg, and Jonathan Wadsworth

in The Labour Market in Winter: The State of Working Britain

This chapter focuses on job tenure and job turnover in the UK. It considers job tenure and job turnover as possible measures of job stability, and examines the issue of job stability among different ... More

This chapter focuses on job tenure and job turnover in the UK. It considers job tenure and job turnover as possible measures of job stability, and examines the issue of job stability among different groups. It demonstrates the difference in the rate of job tenure and the cost of job loss between men and women.Less

U.S. Offshoring: Small Steps to Make It Win-Win

Diana Farrell

in The Economists' Voice: Top Economists Take On Today's Problems

This chapter considers the issue of offshoring. The United States leads the world in offshoring white-collar jobs to low-wage countries. Today they employ more than 900,000 service workers overseas. ... More

This chapter considers the issue of offshoring. The United States leads the world in offshoring white-collar jobs to low-wage countries. Today they employ more than 900,000 service workers overseas. But widespread concern about the effects on the U.S. job market has prompted policymakers to call for curbs on offshoring, and some states have already adopted such policies. It is argued that fears about job losses and wage cuts in the United States due to offshoring are vastly overstated. Protectionism may save a few jobs for a while, but it will stifle innovation and job creation in the longer term. Rather than trying to stop globalization, the goal must be to let it happen, while easing the transition for workers who lose out.Less

Introduction

Kenneth A. Couch, Mary C. Daly, and Julie M. Zissimopoulos

in Lifecycle Events and Their Consequences: Job Loss, Family Change, and Declines in Health

The introductory chapter presents an overview of this volume which provides a structured examination of three of the most important events that occur in the lives of most adults: changes in ... More

The introductory chapter presents an overview of this volume which provides a structured examination of three of the most important events that occur in the lives of most adults: changes in employment, family, and health. The book's sections are organized around these events. Each section contains a chapter that provides an initial overview of how common it is to experience changes in employment, family, and health. Then, additional chapters are provided that examine both short and long-term consequences of events of each type. Because each individual topical area, such as job loss, might relate to the others, e.g. changes in family structure, each section includes a chapter that examines at least one of these interrelationships. As a whole, the studies contained in the volume demonstrate that very common life transitions are strongly linked to short and long-term economic well-being but also cascade into other areas of life.Less