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IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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United States International Trade Commission (USITC)

OFFICE OF INDUSTRIES WORKING PAPER ID-29

U.S. Multinational Services Companies: Effects of Foreign Affiliate Activity on U.S. Employment

by Lisa Alejandro, Richard Brown, Erick Oh, Joann Peterson, Samantha Brady Pham, Matthew Reisman, and Isaac Wohl

http://www.usitc.gov/publications/332/working_papers/ServicesEmploymentWorkingPaperNEWFINAL8.23.11.pdf

[full-text, 81 pages]

Abstract

This working paper examines the effect that U.S. services firms’ establishment abroad has on

domestic employment. Whereas many papers have explored the employment effects of foreign

direct investment in manufacturing, few have explored the effects of services investment. We

find that services multinationals’ activities abroad increase U.S. employment by promoting

intrafirm exports from parent firms to their foreign affiliates. These exports support jobs at the

parents’ headquarters and throughout their U.S. supply chains. Our findings are principally

based on economic research and econometric analysis performed by Commission staff, services

trade and investment data published by the Bureau of Economic Analysis, and employment data

collected by the Bureau of Labor Statistics. In the aggregate, we find that services activities

abroad support nearly 700,000 U.S. jobs. Case studies of U.S. multinationals in the banking,

computer, logistics, and retail industries provide the global dimensions of U.S. MNC operations

and identify domestic employment effects associated with foreign affiliate activity in each

industry.

CONTENTS

Abstract i

Introduction 1

1: Estimation of Employment Effects 6

Domestic employment effects

2: Banking Services 15

Summary 15

Industry overview 15

Operations of Multinational Banks and Links to Employment 18

3: Computer Services 23

Summary 23

Overview 23

Employment in computer services 26

Effects on multinational’s foreign activities on U.S. employment 27

Conclusions 31

4: Logistics Services 33

Summary 33

Industry overview 33

Operations of MNCs in the logistics industry 36

International operations of logistics services providers 36

Overall employment trends 37

International employment 38

Employment in the United States 39

Employment at firms that rely on logistics networks 42

Conclusion 42

5: Retail Services 45

Summary 45

Overview: An increasingly international business 45

Employment in the retail industry 48

Operations of multinational retailers and U.S. employment 52

Directions for future research 55

Conclusion 57

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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 262-6041               
Fax: (607) 255-9641                       
E-mail: smb6@cornell.edu                  
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