The impact of foreign direct investment on the Romanian labour market: new evidence from a pooled model

  • Laura DIACONU MAXIM “Alexandru Ioan Cuza” University of Iasi, Romania
  • Daniel ȘTERBULEAC “Alexandru Ioan Cuza” University of Iasi, Romania
Keywords: Foreign direct investment, Labour market, Number of employees, Income, Small and medium enterprises, Romania

Abstract

The present paper presents a series of results concerning the labour market impact of the foreign direct investment (FDI) inflows in Romania, during the period 2005-2014. In order to reach this objective, we have conducted both an investigation of the specialized literature and an econometric analysis, based on a pooled OLS regression. The added value of this study results from the novelty aspects brought by the results, which indicate two new roles of FDI on the Romanian labour market: a potential “gap-widening” effect between the civil employment and number of employees and a “crawling” effect on the net income. Since the results showed a positive correlation between FDI and civil employment and also between FDI and the average number of employees, the first effect suggests that most of employees of the foreign firms work there less than one year. This may explain why foreign companies are not motivated to offer their employees much higher wages than the local firms and thus that the effect of FDI on nominal net income is very small (“crawling” effect).

Author Biographies

Laura DIACONU MAXIM, “Alexandru Ioan Cuza” University of Iasi, Romania

Faculty of Economics and Business Administration

Associate Professor, PhD.

Daniel ȘTERBULEAC, “Alexandru Ioan Cuza” University of Iasi, Romania

Faculty of Biology

PhD. Student

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Published
2018-01-23
How to Cite
DIACONU MAXIM, L., & ȘTERBULEAC, D. (2018). The impact of foreign direct investment on the Romanian labour market: new evidence from a pooled model. Timisoara Journal of Economics and Business, 10(1), 19-34. https://doi.org/https://doi.org/10.1515/tjeb-2017-0002
Section
Articles