Gender-, age- and educational attainment level-specific output-employment relationship and its dependence on foreign direct investment

This paper analyses the gender-, age- and educational attainment level-specific output-employment relationship and its dependence on foreign direct investment (FDI). The unbalanced panel covers 25 European Union countries' data from 2000 to 2020. Empirical estimations are made using the pooled OLS estimator. The impact of FDI on gender-, age- and educational attainment level-specific output-employment elasticities is estimated by including the multiplicative terms between gross domestic product (GDP) and FDI in regression models. The main results indicate the positive impact of economic growth on employment, with the highest output-employment elasticities for males and youth regardless of gender. The estimation results also indicate limited abilities of economic growth to increase the employment of highly educated people and females older than 25 years regardless of their educational attainment level. Our results suggest that higher FDI level in the host countries is mostly associated with the decreasing employment reaction to economic growth. Although FDI is an important factor affecting the output-employment relationship, it does not help to solve the problem of unemployment in the EU, especially for youth.