"To stay, or not to stay?" - That is the question

After the 1970s, the amount of domestic firms that started to invest, produce and settle beyond their own borders, had risen rapidly. This phenomenon, combined with the beginning of the deindustrialization process and a sectoral shift in employment in Europe and the United States, have surged the debate on whether these trends are to some extent related to each other. In this thesis, I try to assess whether these concerns are valid, by measuring the home-country employment effects of outward foreign direct investment in 24 European countries, over the period 2002-2012. The effect of foreign direct investment is measured on total employment, before taking a closer look at potential differences between the service sector and manufacturing sector. Using an individual- and time fixed effects analysis, I find no significant effect of outward foreign direct investment on total employment. However, the effect of FDI on sectoral employment between North-western and South-eastern Europe differ substantially. North-western Europe experiences no effect of outward direct investment on manufacturing employment, yet a small positive effect on service sector employment. For South-eastern European countries, I find a positive effect in the manufacturing sector and no significant effect in the service sector.