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Labor Decomposition: A Firm Level Analysis on Import Quality and Labor Demand

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  • Warda, Peter

    () (Jönköping International Business School (JIBS), Center of Excellence for Science and Innovation Studies (CESIS) KTH, Sweden)

Abstract

Structural changes due to global integration certainly affect the employment, productivity and profitability of firms. An interesting case reflects how firms use imports to replace certain stages in production of physical goods. The relevant question here is: if imports make up a substantial part of firms’ sales value, then can the import quality affect firms’ labor composition? The purpose of this paper is to analyze how high and low quality imports affect the labor composition in importing firms in Swedish manufacturing. Inter-firm variation shows that an increase in high (low) quality imports, on average, decreases the share of high-educated (low-educated) labor wages in total wages. Hence, a substitution effect. However, when intra-firm variation is considered the results are instead in favor of a complementary effect.

Suggested Citation

  • Warda, Peter, 2013. "Labor Decomposition: A Firm Level Analysis on Import Quality and Labor Demand," Working Paper Series in Economics and Institutions of Innovation 322, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0322
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    More about this item

    Keywords

    Labor decomposition; labor composition; imports; quality of imports; manufacturing;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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