The skill composition of Korean multinational firms

We investigate the skill composition effect of FDI. We first study whether FDI matters for the skill composition of the multinational firm in general, and addtionally examine the role of the income level of the host country. Then, we particularly focus on skill composition of foreign affiliates and relate it that of their parent firm. To this end, we use the unique occupation information of multinational firms headquartered in South Korea. We find that the demand for skill at the parent firm in general increases as its foreign affiliates becomes larger, and that the high demand along with FDI occurs irrespective of the the income level of the host country. Furthermore, the demand for skill is found to increase because foreign affiliates do unskilled intensive activities. Thus, this paper provides the evidence that globalization increases the demand for skill, which supports public concern that globalization exacerbates inequality.