The full paper is available here: http://www.unido.org/resources/publications/publications-by-type/working-papers.html. Using a unique sample of foreign-owned and domestic firms in Sub-Saharan Africa, we study the differences in the quantity and quality of jobs that they offer, and identify how these differences are determined by country-level institutional factors. After controlling for numerous firm-level characteristics, we find that foreign-owned firms offer more stable and secure jobs than domestic firms, as evidenced by their higher and lower shares of permanent full-time and temporary employment, respectively. The job stability and security advantage of foreign-owned firms is smaller in countries with higher firing costs and better governance quality, where domestic firms are likely to offer more stable and secure jobs. In addition, foreign-owned firms are less likely to offer unpaid work and have a lower share of these workers. They also have a higher average training intensity and pay an average wage premium, as well as wage premia to production, non-production and managerial workers. The wage premia of foreign-owned firms are lower in countries with higher governance and social policy standards, where domestic firms are likely to pay higher wages. Finally, we show that the job quality advantage of foreign-owned firms depends on the location of their parents, the mode of their establishment, their main business purpose and the most critical investment incentive received from the host country.

1. Introduction Related literature Data Econometric model Empirical results Conclusion
Jobs, FDI and Institutions in Sub-Saharan Africa:
Evidence from Firm-level Data
Sotiris Blanas* Adnan Seric** Christian Viegelahn***
*Lancaster University
**United Nations Industrial Development Organization (UNIDO)
***International Labour Organization (ILO)
EALE 2017 Annual Conference
University of St. Gallen
September 23, 2017
All views expressed in this presentation are those of the authors and do not reflect the views of the institutions they
are affiliated with.

2. Introduction Related literature Data Econometric model Empirical results Conclusion
Motivation and research questions
Rapid expansion of FDI into developing countries in recent decades
Voluminous literature on effects of FDI on the host countries
(Javorcik, 2014; Blomstr¨om and Kokko, 1998)
Research questions:
Do foreign MNEs create jobs in host countries?
Are these jobs of higher quality than those created by domestic
firms?
Level of employment stability and security
Opportunities for training and human capital development
Level of wages
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3. Introduction Related literature Data Econometric model Empirical results Conclusion
This paper
This paper:
Study the differences in the quantity and quality of jobs between
foreign-owned and domestic firms
Firm-level data from the UNIDO Africa Investor Survey 2010
Study how institutional factors at the country-level determine these
differences
Contribution 1:
Novel empirical evidence for Sub-Saharan Africa
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4. Introduction Related literature Data Econometric model Empirical results Conclusion
This paper
Vulnerable employment and working poverty in Africa (% of total employment)
Source: ILO, Trends Econometric Models, November 2016.
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5. Introduction Related literature Data Econometric model Empirical results Conclusion
This paper
Inward FDI into Africa, stock and flow (% of GDP)
Source: UNCTAD.
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6. Introduction Related literature Data Econometric model Empirical results Conclusion
This paper
Contribution 2:
Common measures of job quantity and quality:
Total employment, wages (by type of worker)
Uncommon measures of job quality:
Employment by contract type, employment by worker type, unpaid work,
training expenditure by worker type
Contribution 3:
Additional characteristics of foreign-owned firms:
Location of parent company, greenfield FDI, MOFA status, main business
purpose, critical incentive for foreign investment
Contribution 4:
Empirical evidence on the role of country-level institutions:
Employment protection, governance quality, social policy
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7. Introduction Related literature Data Econometric model Empirical results Conclusion
Preview of findings: different types of employment
Foreign-owned firms tend to offer more stable and secure jobs
than domestic firms
higher share of permanent full-time workers
lower share of temporary workers
Higher job stability/security offered by foreign-owned firms
whose parents are located inside and outside SSA
which have been created as greenfield FDI
whose main business purpose is to access new markets
which have benefited from capital grants, tax exemption,
improved infrastructure
Job stability/security gap between foreign-owned and
domestic firms smaller in countries with
higher firing costs, higher governance quality
Foreign-owned firms are less likely to offer unpaid work
Foreign-owned firms have a lower share of unpaid workers
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8. Introduction Related literature Data Econometric model Empirical results Conclusion
Preview of findings: female/foreign employment, training
No statistically significant differences between foreign-owned
and domestic firms in terms of female employment
Foreign-owned firms have higher shares of
total foreign employment
foreign production, non-production, managerial workers
Foreign-owned firms tend to invest more in training
higher average training intensity
Higher average training intensity of foreign-owned firms
whose parents are located in high-income countries
which have been created as greenfield FDI
whose main business purpose is cost-effective production, input
access
which have benefited from tax exemption, recruitment grants
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9. Introduction Related literature Data Econometric model Empirical results Conclusion
Preview of findings: wages
Foreign-owned firms tend to pay higher wages
higher average wage
higher wage to production, non-production, managerial workers
Wage premia paid by foreign-owned firms
whose parents are located inside and outside SSA
which have been created as greenfield FDI, M&As
whose main business purpose is to access new markets, join a
local partner, export back home, benefit from trade
agreements
which have benefited from capital grants, tax exemption,
recruitment grants
Wage gap between foreign-owned and domestic firms lower in
countries with
higher governance quality, greater social inclusion
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10. Introduction Related literature Data Econometric model Empirical results Conclusion
Related literature: labour practices in foreign affiliates
MNEs tend to adapt to labour practices in host countries
Almond and Ferner (2006) on US MNEs with affiliates in Europe
MNEs transplant their management practices into their affiliates,
not their human resource practices
Bloom et al. (2009) on US MNEs with affiliates in UK, Germany, France
Foreign affiliates adopt human resource practices which are closer
to those of their host countries
Freeman et al. (2008) on a single US MNE with domestic and foreign
affiliates
Corporate social responsibility and adherence to MNE standards in
workplace practices
OECD and ILO (2008)
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11. Introduction Related literature Data Econometric model Empirical results Conclusion
Related literature: training/wages in foreign-owned firms
Transfer of critical human capital to foreign affiliates from other
parts of the MNE e.g. parent company or sister affiliate
Moran et al. (2007), Coniglio et al. (2016)
Foreign-owned firms offer more training to their employees than
domestic firms
Chen (1983), Gershenberg (1987), Lindsey (1994), Filer et al. (1995),
World Bank (1997), Blomstr¨om and Kokko (1998), Barthel et al. (2011),
Javorcik (2015)
Wage premia of foreign-owned firms
te Velde and Morrissey (2003), Strobl and Thornton (2004), Lipsey and
Sj¨oholm (2004, 2006), Coniglio et al. (2015)
Lack of wage premia of foreign-owned firms in developed countries
Heyman et al. (2007), Huttunen (2007), Andrews et al. (2009),
Malchow-Møller et al. (2013)
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12. Introduction Related literature Data Econometric model Empirical results Conclusion
Related literature: explanations for wage premia in
foreign-owned firms
Knowledge diffusion through labour mobility
Fosfuri et al. (2001), Glass and Saggi (2002), Balsvik (2011)
International rent sharing
Budd and Slaughter (2004), Budd et al. (2005)
Compensation for higher labour demand volatility in foreign plants
Fabbri et al. (2003)
Offset lack of knowledge of local labour markets
Lipsey and Sj¨oholm (2004)
Best-performing domestic firms taken over by foreign investors
Almeida (2007)
Unobservable worker characteristics (e.g. greater motivation)
Javorcik (2015)
Pivotal role of managers in international production hierarchies
Antr`as et al. (2006)
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13. Introduction Related literature Data Econometric model Empirical results Conclusion
Data sources
Firm-level data
UNIDO Africa Investor Survey 2010
Representative sample of 6497 domestic and foreign-owned registered firms
Coverage of all economic sectors in 19 Sub-Saharan African countries
Country-level data
Mo Ibrahim Foundation, Ibrahim Index of African Governance
Measure of the quality of institutions
World Bank, World Development Indicators
Measure of firing costs
World Bank, Country Policy and Institutional Assessment (CPIA)
Measure of social inclusion
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14. Introduction Related literature Data Econometric model Empirical results Conclusion
Summary statistics for firm-level continuous variables
Variable Obs Mean Sd
total employment 6400 184 643
permanent full-time employment (share) 6388 0.80 0.25
temporary employment (share) 6306 0.17 0.23
part-time employment (share) 6276 0.03 0.09
unpaid work (share) 6005 0.01 0.05
permanent full-time production workers (share) 6398 0.49 0.32
permanent full-time non-production workers (share) 6398 0.25 0.25
permanent full-time managerial workers (share) 6222 0.23 0.21
permanent full-time female workers (share) 6186 0.26 0.22
permanent full-time female production workers (share) 5221 0.19 0.26
permanent full-time female non-production workers (share) 5750 0.41 0.31
permanent full-time female managerial workers (share) 5659 0.21 0.25
permanent full-time foreign workers (share) 5777 0.05 0.10
permanent full-time foreign production workers (share) 5232 0.02 0.08
permanent full-time foreign non-production workers (share) 5782 0.05 0.16
permanent full-time foreign managerial workers (share) 5397 0.15 0.27
average training intensity (USD) 5907 6.4 65.5
training intensity for production workers (USD) 5120 3.3 49.2
training intensity for non-production workers (USD) 5644 6.5 88.6
training intensity for managerial workers (USD) 5717 16.3 278.7
average wage (thousand USD) 5830 1.4 74.3
wage for production workers (USD) 5730 29.6 419.4
wage for non-production workers (USD) 5822 39.4 383.3
wage for managerial workers (USD) 5788 57.3 537.7
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15. Introduction Related literature Data Econometric model Empirical results Conclusion
Summary statistics for firm-level dummy variables
Dummy variable No Yes Total
# % # % # %
temporary employment 2911 44.8 3586 55.2 6497 100
part-time employment 5460 84 1037 16 6497 100
unpaid work 5470 90.7 558 9.3 6028 100
foreign ownership 4094 63 2403 37 6497 100
parent in high-income (HI) country 1132 49.9 1136 50.1 2268 100
parent in low/middle-income (LMI) country 1448 63.8 822 36.2 2270 100
parent in Sub-Saharan Africa (SSA) 1961 86.3 312 13.7 2273 100
greenfield FDI 364 15.6 1965 84.4 2329 100
majority-owned foreign affiliate (MOFA) 291 12.5 2046 87.5 2337 100
principal motive to invest: new market access 587 25.7 1697 74.3 2284 100
principal motive to invest: low cost 2135 93.5 149 6.5 2284 100
principal motive to invest: input access 2164 94.7 120 5.3 2284 100
principal motive to invest: join partner 2170 95 114 5 2284 100
principal motive to invest: export back home 2227 97.5 57 2.5 2284 100
principal motive to invest: TA benefits 2233 97.8 51 2.2 2284 100
principal motive to invest: other 2188 95.8 96 4.2 2284 100
critical incentive to invest: capital grants 1186 93.7 80 6.3 1266 100
critical incentive to invest: tax exemption 804 63.5 462 36.5 1266 100
critical incentive to invest: recruitment grants 1256 99.2 10 0.8 1266 100
critical incentive to invest: staff training 1202 94.9 64 5.1 1266 100
critical incentive to invest: infrastructure 1162 91.8 104 8.2 1266 100
critical incentive to invest: other 720 56.9 546 43.1 1266 100
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16. Introduction Related literature Data Econometric model Empirical results Conclusion
Summary statistics for country-level variables
Country Firing costs Governance quality Social inclusion
Burkina Faso 34 53.3 3.6
Burundi 26 45.8 3.3
Cameroon 33 46.8 3.1
Cape Verde 93 75.2 4.3
Ethiopia 40 44.3 3.6
Ghana 178 67.2 3.9
Kenya 47 53 3.5
Lesotho 44 58.3 3.3
Madagascar 30 50.9 3.6
Malawi 84 56.5 3.5
Mali 31 55.6 3.4
Mozambique 134 54.8 3.3
Niger 35 43 3.1
Nigeria 50 44.7 3.2
Rwanda 26 56.2 3.9
Senegal 38 58 3.4
Tanzania 18 58.8 3.7
Uganda 13 54.3 3.8
Zambia 178 56.7 3.5
Sample mean 59.6 54.4 3.5
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17. Introduction Related literature Data Econometric model Empirical results Conclusion
Econometric model
Estimation of the following model for firm z in host country c and industry j:
JQzcj = α + β1 ∗ foreignzcj + β2 ∗ controlszcj + βc ∗ Dc + βj ∗ Dj + zcj
JQzcj : job quantity/quality measure
total employment, employment share by contract and worker type
dummies for temporary, part-time and unpaid work
share of unpaid work
average training intensity, training intensity by worker type
average wage, wage by worker type
If JQzcj continuous variable: estimation with OLS
If JQzcj dummy variable: estimation with probit
foreignzcj : dummy variable that indicated if firm is foreign-owned
Dc : host country FE
Dj : industry FE
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18. Introduction Related literature Data Econometric model Empirical results Conclusion
Econometric model
controlszcj : vector of firm-level control variables
total sales, labour productivity, skill intensity, average wage
dummy indicating provision of training to employees
capital intensity, firm age
dummy indicating engagement in local backward linkages
dummy indicating engagement in local forward linkages
dummy indicating import status
dummy indicating export status
dummy indicating main competition from imports
dummy indicating main competition from domestic firms
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19. Introduction Related literature Data Econometric model Empirical results Conclusion
Employment and foreign ownership
(1) (2) (3) (4) (5) (6) (7) (8)
Dep. var: total permanent temporary temporary part-time part-time unpaid unpaid
employment employment employment employment employment employment work work
(share) (dummy) (share) (dummy) (share) (dummy) (share)
foreign -0.07*** 0.02*** -0.02 -0.02*** -0.008 -0.003 -0.03*** -0.003**
sales 0.9*** 0.04*** 0.009 -0.03*** 0.005 -0.006*** -0.003 -0.004***
productivity -0.9*** -0.05*** -0.004 0.05*** -0.02*** 0.007*** -0.005 0.003***
skill intensity 0.09** -0.04** 0.03 0.04** 0.03 0.005 -0.02 0.0002
wage 0.04*** -0.007* 0.005 0.010*** -0.006 -0.002 -0.003 -0.0010
training -0.0009 -0.003 0.02 -0.008 0.05*** 0.009*** 0.03*** 0.003**
capital intensity 0.02*** -0.008*** 0.02*** 0.008*** 0.01*** 0.0002 0.002 -0.0006
firm age 0.0007 -0.0002 0.0006 0.0002 0.0006 0.000006 0.000009 0.00007*
local backward link 0.02 -0.02** 0.05*** 0.02** 0.01 0.0007 0.01 0.002
import status 0.06 -0.07 -0.1 0.09 -0.01 -0.02 0.06 0.01
local forward link 0.02 -0.01* 0.05*** 0.006 0.04*** 0.009*** 0.01 -0.0001
export status 0.09*** -0.05*** 0.06*** 0.05*** 0.03** 0.002 -0.003 0.0009
import competition 0.01 -0.007 0.01 -0.0006 0.01 0.006 0.02 -0.002
local competition 0.02 -0.01 0.01 0.004 0.006 0.005 0.008 0.001
Obs 4944 4944 4946 4931 4946 4916 4808 4807
R2 0.87 0.21 0.21 0.038 0.043
Pseudo − R2 0.11 0.078 0.095
Log − likelihood -2978.0 -2039.6 -1304.7
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20. Introduction Related literature Data Econometric model Empirical results Conclusion
Employment and foreign ownership
Panel A: Firing costs
(1) (2) (3) (4) (5) (6) (7) (8)
Dep. var: total permanent temporary temporary part-time part-time unpaid unpaid
employment employment employment employment employment employment work work
(share) (dummy) (share) (dummy) (share) (dummy) (share)
foreign -0.1*** 0.06*** -0.05** -0.05*** -0.03* -0.007 -0.03* -0.002
[0.02] [0.01] [0.02] [0.01] [0.02] [0.004] [0.01] [0.002]
foreign * firing cost 0.0009*** -0.0005*** 0.0006** 0.0005*** 0.0004* 0.00006 -0.00008 -0.00003
[0.0002] [0.0001] [0.0003] [0.0001] [0.0002] [0.00004] [0.0002] [0.00003]
Obs 4944 4944 4946 4931 4946 4916 4808 4807
R2 0.87 0.21 0.21 0.038 0.043
Pseudo − R2 0.11 0.079 0.095
Log − likelihood -2975.2 -2038.1 -1304.6
Panel B: Governance quality
(1) (2) (3) (4) (5) (6) (7) (8)
Dep. var: total permanent temporary temporary part-time part-time unpaid unpaid
employment employment employment employment employment employment work work
(share) (dummy) (share) (dummy) (share) (dummy) (share)
foreign -0.3*** 0.1*** -0.03 -0.1*** -0.002 -0.002 0.05 0.003
[0.10] [0.05] [0.1] [0.04] [0.08] [0.02] [0.06] [0.01]
foreign * governance 0.004** -0.002** 0.0002 0.002*** -0.0001 -0.00003 -0.002 -0.0001
[0.002] [0.0009] [0.002] [0.0008] [0.001] [0.0003] [0.001] [0.0002]
Obs 4944 4944 4946 4931 4946 4916 4808 4807
R2 0.87 0.21 0.21 0.038 0.043
Pseudo − R2 0.11 0.078 0.095
Log − likelihood -2978.0 -2039.6 -1303.7
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21. Introduction Related literature Data Econometric model Empirical results Conclusion
Training, wages and foreign ownership
Panel A: Provision of training and foreign ownership
(1) (2) (3) (4)
Dep. var: training intensity
average production non-production managerial
workers workers workers
foreign 0.109* 0.008 0.036 0.043
[0.062] [0.027] [0.030] [0.038]
Obs 4430 4225 4612 4705
R2 0.29 0.16 0.18 0.21
Panel B: Wages and foreign ownership
(1) (2) (3) (4)
Dep. var: average wage for wage for wage for
wage production non-production managerial
workers workers workers
foreign 0.208*** 0.120*** 0.162*** 0.229***
[0.035] [0.029] [0.028] [0.029]
Obs 4947 4332 4674 4756
R2 0.83 0.91 0.89 0.89
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22. Introduction Related literature Data Econometric model Empirical results Conclusion
Wages and foreign ownership
Panel A: Governance quality
(1) (2) (3) (4)
Dep. var: average wage for wage for wage for
wage production non-production managerial
workers workers workers
foreign 0.604** 0.408** 0.402** 0.830***
[0.269] [0.180] [0.173] [0.179]
foreign * governance -0.007 -0.005* -0.004 -0.011***
[0.005] [0.003] [0.003] [0.003]
Obs 4947 4332 4674 4756
R2 0.83 0.91 0.89 0.89
Panel B: Social inclusion
(1) (2) (3) (4)
Dep. var: average wage for wage for wage for
wage production non-production managerial
workers workers workers
foreign 1.399*** 0.870*** 0.705** 1.687***
[0.432] [0.298] [0.298] [0.322]
foreign * social inclusion -0.332*** -0.209** -0.151* -0.406***
[0.120] [0.082] [0.082] [0.088]
Obs 4947 4332 4674 4756
R2 0.83 0.91 0.89 0.89
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23. Introduction Related literature Data Econometric model Empirical results Conclusion
Conclusion and policy implications
Relative to domestic firms, foreign-owned firms tend to create jobs
which offer:
higher employment stability and security
more training opportunities
higher wages
Crucial role of additional characteristics of foreign-owned firms:
parent location
mode of foreign investment (e.g. greenfield FDI)
principal motive for foreign investment (e.g. market access)
critical incentive for foreign investment (e.g. tax exemption)
majority foreign ownership
Better human resource practices of MNEs transplanted, at least
partially, into their foreign affiliates?
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24. Introduction Related literature Data Econometric model Empirical results Conclusion
Conclusion and policy implications
Differences in job stability and security smaller in countries with
higher firing costs
higher governance quality
Wage differences smaller in countries with
higher governance quality
higher social policy standards
Domestic firms offer more stable and secure and better paid jobs in
these countries
Smaller benefits for local workers in these countries from the
presence of foreign MNEs
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25. Introduction Related literature Data Econometric model Empirical results Conclusion
Suggestions for further research
Do MNEs transplant their (better) human resource practices
into their foreign affiliates and to what extent? If yes, why?
Do these spill over to domestic firms and how?
Accounting for worker and foreign firm heterogeneity to
explain wage premia
Causal relationship of foreign ownership with job
quantity/quality
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