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Foreign ownership and effects on employment and wages: The case of Sweden

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Author Info

  • Brännlund, Runar

    ()
    (Department of Economics, Umeå University)

  • Nordström, Jonas

    ()
    (Department of Economics, Umeå University)

  • Svedin, Dick

    ()
    (Department of Social Science, Mid Sweden University)

Abstract

In this paper we study how foreign ownership of Swedish companies affect employment and wage setting. To study the effects we specify a model that is essentially based on the assumption that the Swedish labour market can be described as a market where trade unions and employers bargain over both wage and employment. Our hypothesis is that the bargaining power is affected by institutional settings and the ownership of the firm. The data we used to test our hypothesis is a panel data set including nearly 200 firms, spanning over the period 1980-1994. The results indicate that foreign ownership has no significant effect on employment, whereas the effect on wages is significantly positive.

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Bibliographic Info

Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 638.

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Length: 22 pages
Date of creation: 30 Jun 2004
Date of revision: 01 Nov 2004
Handle: RePEc:hhs:umnees:0638

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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
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Web page: http://www.econ.umu.se/
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Keywords: Bargaining power; foreign direct investment; employment; trade union; wages.;

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References

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  1. Bughin, Jacques & Vannini, Stefano, 1995. "Strategic direct investment under unionized oligopoly," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(1), pages 127-145, March.
  2. Vannetelbosch, Vincent J., 1993. "Testing Between Alternative Wage-Employment Bargaining Models Using Belgian Aggreggate Data," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 1994012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 27 Apr 1994.
  3. Robin Naylor & Michele Santoni, 1999. "Foreign direct investment and wage bargaining," CSGR Working papers series, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick 41/99, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  4. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 97(385), pages 121-39, March.
  5. Aitken, B. & Harrison, A. & Lipsey, R.E., 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States," Papers, Columbia - Graduate School of Business 95-21, Columbia - Graduate School of Business.
  6. Alogoskoufis, George & Manning, Alan, 1991. "Tests of alternative wage employment bargaining models with an application to the UK aggregate labour market," European Economic Review, Elsevier, Elsevier, vol. 35(1), pages 23-37, January.
  7. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002, Royal Economic Society 9, Royal Economic Society.
  8. Robert E. Lipsey, 1994. "Foreign-Owned Firms and U.S. Wages," NBER Working Papers 4927, National Bureau of Economic Research, Inc.
  9. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 896-908, December.
  10. Minsik Choi, 2001. "Threat Effect of Foreign Direct Investment on Labor Union Wage Premium," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp27, Political Economy Research Institute, University of Massachusetts at Amherst.
  11. Hausman, Jerry A., 1983. "Specification and estimation of simultaneous equation models," Handbook of Econometrics, Elsevier, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 7, pages 391-448 Elsevier.
  12. Hatzius, Jan, 2000. "Foreign direct investment and factor demand elasticities," European Economic Review, Elsevier, Elsevier, vol. 44(1), pages 117-143, January.
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Cited by:
  1. Roger Bandick & Patrik Karpaty, . "Foreign Acquisition and Employment Effects in Swedish Manufacturing," Discussion Papers 07/35, University of Nottingham, GEP.
  2. Bandick, Roger & Karpaty, Patrik, 2011. "Employment effects of foreign acquisition," International Review of Economics & Finance, Elsevier, Elsevier, vol. 20(2), pages 211-224, April.

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