Working Paper No. 523

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

Published: November 1, 1999Pages: 29Keywords: Labor Demand; Multinational Firms; Vertically Integrated FirmsJEL-codes: F23; J23

Swedish Multinationals and Competition from High- and Low-Wage Locations Henrik Braconier and Karolina Ekholm


This study uses data on Swedish multinationals to estimate cross elasticities of labour demand in different locations. With a vertical decomposition of the firm's activities, whether there is substitution or complementarity between employment in different parts of the firm 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 firms. We find that there is some evidence of a substitutionary relationship between employment in the Swedish parts of the firms and employment in other high-income locations, but we do not find any evidence of substitution stemming from employment in low-income locations. We find mainly a relationship of complementarity between employment in different affiliates.

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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