The impact of outward FDI on the home country's labour demand and skill composition

The present paper adds to the literature investigating the effects of outward FDI on the home country employment and skill composition. Considering the ‘‘industrial region’’ as the unit of the analysis, we capture both direct and indirect effects of foreign production on the parent company and its environment. The empirical evidence refers to the internationalisation of production by Italian firms throughout the period 1996–2002, and it shows that foreign activities have a negative impact upon the demand for low skilled workers in the parent company’s ‘‘industrial region’’, but also on the demand for high skilled workers when FDI are addressed to high income countries.