The Employment Consequences of Globalization: Linking Data on Employers and Employees in the Netherlands

Abstract

Globalization – or the increased interconnectedness of nations, peoples and economies – is often illustrated by the strong growth of international trade, foreign direct investment (FDI) and multinational enterprises (MNEs). At the moment, more firms, in more industries and countries than ever before, are expanding abroad through direct investment and trade. The advent of globalization has been paired with intense debates among policy makers and academics about its consequences for a range of social issues related to employment, labor conditions, in-come equality and overall human wellbeing. On the one hand, the growing inter-nationalization of production may lead to economic growth, increased employment and higher wages. In setting up affiliates and hiring workers, MNEs directly and indirectly affect employment, wages and labor conditions in host countries (see e.g. Driffield 1999; G rg 2000; and Radosevic et al. 2003). On the other hand, fears are often expressed that economic growth may be decoupled from job creation, partly due to increased competition from low-wage countries, or through outsourcing and offshoring activities of enterprises (Klein 2000; Korten 1995). These concerns about the employment consequences of globalization are not entirely unwarranted, as studies by Kletzer (2005) and Barnet and Cavenagh (1994) have shown.