IBS Lunchtime Research Seminar - Foreign direct investment and informal labour markets in emerging economies: Evidence of Mexican municipalities

You are cordially invited to attend an International Business and Strategy Departmental Research Meeting, during which there will be a presentation by Dr Eduardo Ibarra-Olivo, Henley Business School. A reminder that attendance for IBS (full time, research oriented) staff and full-time students is compulsory, and where possible, must be in person. Individuals unable to attend in person, due to legitimate reasons will be provided a Teams link on request. Non-IBS staff are welcome to attend, but must register prior to the event. If you have not received the email invite please email Angie Clark

Please join us in Room 108, Henley Business School.

Please make sure you let me know in advance if you intend to attend in person so that the correct amount of catering is booked.

Date: Wednesday 19th March 2025, HBS Room 108

Time: 13.00 - 14.15pm

Abstract:

Multinational Enterprise (MNE) presence can have varying effects on informality in the host economy. While foreign firms typically hire labour from the formal sector, they may also rely on informal labour, either directly or indirectly through subcontracting or inter-industry linkages. The economic significance of these effects depends on a sector's labour force requirements, the MNEs’ reliance on specific labour types and the prevalence of informality in the host labour markets. Recent shifts in the sectoral composition and subnational spatial distribution of inward foreign direct investment (FDI) have occurred alongside persistent labour informality in the Mexican economy, with informality rates varying across subnational regions. This paper examines the heterogeneous effects of sector-specific direct investment by multinational enterprises (MNEs) on the propensity for informality in the host region. By exploiting cross-municipality variation in both labour informality and inward FDI stocks, we assess the capacity of such investments to either increase or decrease informal employment in the host regional economy. This analysis sheds light on the complex link between FDI and labour informality in an emerging Latin American economy and its implications for labour market outcomes for both individuals and regions.