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European Economic Review

Global Engagement and the Occupational Structure of Firms

Scientific Article in English
Reference
Davidson, Carl, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm and Susan Chun Zhu (2017). “Global Engagement and the Occupational Structure of Firms”. European Economic Review 100, 273–292. doi.org/10.1016/j.euroecorev.2017.08.009

Authors
Carl Davidson, Fredrik Heyman, Steven Matusz, Fredrik Sjöholm, Susan Chun Zhu

Global engagement can impact firm organization and the occupations firms need. We use a simple task-based model of the firm’s choice of occupational inputs to examine how that choice varies with global engagement. We reveal a robust and causal relationship between global engagement and the skill mix of occupations within firms, using Swedish matched employer-employee data that link firms and the labor force for 1997-2005. Taking an instrumental variable approach, we find that increased export shares (driven by higher world import demand) skew the labor mix more toward high-skill occupations. Our results suggest that global engagement may require firms to employ more skilled labor to undertake complex tasks embodied in international businesses, which have further implications for the demand for specific occupational skills and overall wage dispersion.