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Global engagement and the occupational structure of firms

Author

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

Abstract

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.

Suggested Citation

  • Davidson, Carl & Heyman, Fredrik & Matusz, Steven & Sjöholm, Fredrik & Zhu, Susan Chun, 2017. "Global engagement and the occupational structure of firms," European Economic Review, Elsevier, vol. 100(C), pages 273-292.
    • Handle: RePEc:eee:eecrev:v:100:y:2017:i:c:p:273-292
    DOI: 10.1016/j.euroecorev.2017.08.009
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    2. Priit Vahter & Jaan Masso, 2019. "The contribution of multinationals to wage inequality: foreign ownership and the gender pay gap," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 105-148, February.
    3. Konstantins Benkovskis & Jaan Masso & Olegs Tkacevs & Priit Vahter & Naomitsu Yashiro, 2020. "Export and productivity in global value chains: comparative evidence from Latvia and Estonia," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(3), pages 557-577, August.
    4. Santiago Bonilla & Sašo Polanec, 2024. "The impact of foreign demand shocks on organisational hierarchies," The World Economy, Wiley Blackwell, vol. 47(4), pages 1741-1767, April.
    5. Richard Friberg & Mark Sanctuary, 2020. "Exchange rate risk and the skill composition of labor," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(2), pages 287-312, May.
    6. Carl Davidson & Fredrik Heyman & Steven Matusz & Fredrik Sjöholm & Susan Chun Zhu, 2023. "Globalization, recruitments, and job mobility," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 357-386, May.
    7. Santiago Bonilla & Sašo Polanec, 2021. "Organizational Hierarchies in the Slovenian Manufacturing Sector," Eastern European Economics, Taylor & Francis Journals, vol. 59(6), pages 571-596, November.
    8. Ron Hira, 2020. "Outsourcing: A Case of Shared Mental Models in Conflict," Kyklos, Wiley Blackwell, vol. 73(3), pages 410-435, August.
    9. Marchal, Léa & Ourens, Guzmán & Sabbadini, Giulia, 2025. "When immigrants meet exporters: A reassessment of the migrant-native wage gap," DICE Discussion Papers 420, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    10. Boddin, Dominik & Kroeger, Thilo, 2021. "Structural change revisited: The rise of manufacturing jobs in the service sector," Discussion Papers 38/2021, Deutsche Bundesbank.
    11. Fredrik Heyman & Fredrik Sjöholm, 2019. "Globalization, Job Tasks and the Demand for Different Occupations," Travail et Emploi, La DARES, vol. 0(1), pages 67-91.
    12. Behrens, Kristian & Guillain, Rachel, 2017. "The determinants of coagglomeration: Evidence from functional employment patterns," CEPR Discussion Papers 11884, C.E.P.R. Discussion Papers.
    13. Heyman, Fredrik & Norbäck, Pehr-Johan & Persson, Lars, 2021. "Automation, Work and Productivity: The Role of Firm Heterogeneity," Working Paper Series 1382, Research Institute of Industrial Economics, revised 09 Mar 2023.

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    More about this item

    Keywords

    Occupational structure; Globalization; Multinational Enterprises; Exporters; Offshoring;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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