Within-Host Location Determinants of Employment in Foreign-Owned Establishments in the U.S., 2000-2011: A survey of business climate, vertical, horizontal, and export platform motivations

Abstract

The objective of this exploratory study is to assess the effects of within-host location determinants on the intensity of foreign investment as measured by employment in foreign-owned establishments. This statistical analysis is unique for its use of firm-level microdata from the National Establishment Time-series, which tracks business activity in U.S. establishments over time and isolates the universe of firms that were at one point foreign-owned from 2000 to 2011. Using a series of mixed models with time, industry, metro, and state fixed effects, this study finds that the most important drivers of employment intensity in foreign-owned establishments are firm-level characteristics, vertical factors pertaining to labor supply and wages, local industrial specialization, business attraction subsidies, market capacity, and investor country characteristics. Measures accounting for business climate, human capital formation, and information-based assets did not offer evidence of a consistent and robust relationship with establishment level employment patterns, however more work is needed.