The impact of outward FDI on the labour demand in Italy

The present paper provides further insights on the effects of outward foreign direct investment (FDI) on the home country labour demand for high and low skilled workers. Empirical evidence is provided with reference to the Italian case in the period 1996-2002. The unit of analysis is each ensemble of firms operating in the same industrial filière and localised in the same geographical region. That allows to capture both direct and indirect effects of foreign production on the parent's environment, which arise through the generation of linkages and externalities. Results suggest that outward FDI are related to the overall jobs' off shoring, and that FDI undertaken in low wage countries have a negative impact on the labour demand for low skilled workers.