Swedish Multinationals and Competition from High‐ and Low‐Wage Locations

Abstract

This study uses data on Swedish multinationals to estimate cross elasticities of labour demand in di¤erent locations. With a vertical decomposition of the …rm's activities, whether there is substitution or complementarity between employment in di¤erent parts of the …rm will depend on whether wage changes lead to a relocation of activities or simply to changes in marginal costs and/or demand for inputs in other parts of the …rms. We …nd that there is some evidence of a substitutionary relationship between employment in the Swedish parts of the …rms and employment in other high-income locations, but we do not …nd any evidence of substitution stemming from employment in low-income locations. We …nd mainly a relationship of complementarity between employment in di¤erent a¢liates.

Fragmentation of headquarter services and FDI

“…4 There do exist potential explanations for this non-effect in the literature. Braconier and Ekholm (2000) and Eckel (2003) show that due to cost savings created by relocating production to low cost locations, there is an efficiency-enhancing effect that increases domestic wages.…”

“…Comparable to Braconier and Ekholm (2000) or Eckel (2003), if this savings is large enough, then the creation of a MNE can increase production at home and increase the wages of production workers. However, this result comes about from a change in market structure, thus an expansion of an existing MNE would still be expected to decrease domestic production wages.…”

Revisiting national border effects in foreign trade in goods of Canadian provinces

“…15 aimed at expanding Canada's international trade. 16 The strategy included sectorspecific, multi-year plans for 13 Indeed, in recent decades, it has become more common to produce goods in a number of geographically dispersed stages. This evolution of supply chains has been described by economists as a production fragmentation.…”

Cross-Border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany

“…So far, results have not been conclusive. Some studies find a weak substitutability between parent and affiliate employment (Braconier and Ekholm, 2000;Becker, Ekholm, Jäckle, and Muendler, Konings and Murphy, 2006), which is mostly driven by activities in other high-wage countries, while other studies point to a complementary relationship (Brainard and Riker, 1997;Desai, Foley, and Hines, 2009). Aiming to reconcile these contradicting findings, Harrison and McMillan (forthcoming) stress the importance of distinguishing between horizontal and vertical FDI motives.…”