[bio] Matthew J. Slaughter is associate professor of business administration at the Tuck School of Business at Dartmouth. His current research focuses on the economics and politics of globalization, work that has been widely published in academic journals and featured in business media. In addition to his Tuck position he is currently a research associate at the National Bureau of Economic Research, a term member on the Council on Foreign Relations, and a visiting fellow at the Institute for International Economics. In recent years he has served as a visiting scholar at the Federal Reserve and the International Monetary Fund, and as a consultant to individual companies as well as the U.S. Department of Labor, the World Bank, the Emergency Committee for American Trade, the National Foreign Trade Council, and the Coalition for Fair International Taxation. He received a BA from the University of Notre Dame in 1990 and a PhD from the Massachusetts Institute of Technology in 1994.

[title]Vertical Production Networks in Multinational Firms

[abstract] In recent decades, growth of overall world trade has been driven in large part by the rapid growth of trade in intermediate inputs. Much of this input trade involves multinational firms locating input processing in their foreign affiliates, thereby creating global vertical production networks. In this paper, we use firm-level data on U.S. multinationals to examine trade in intermediate inputs for further processing between parent firms and their foreign affiliates. We estimate affiliate demand for imported inputs as a function of host-country and industry trade costs, factor prices, and other variables. Among our main findings are that demand for imported inputs is higher when affiliates face lower trade costs, lower wages for less-skilled labor (both in absolute terms and relative to wages for more-skilled labor), and lower corporate income tax rates. These results contrast with many findings in previous research.