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

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  • Braconier, Henrik
  • Ekholm, Karolina

Abstract

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.

Suggested Citation

  • Braconier, Henrik & Ekholm, Karolina, 1999. "Swedish Multinationals and Competition from High- and Low-Wage Locations," CEPR Discussion Papers 2323, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2323
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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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