IDEAS home Printed from https://ideas.repec.org/p/hhs/cesisp/0322.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp322.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
    2. Pär Hansson, 2005. "Skill Upgrading and Production Transfer within Swedish Multinationals," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 673-692, December.
    3. Donghyun Oh & Almas Heshmati & Hans Lööf, 2012. "Technical change and total factor productivity growth for Swedish manufacturing and service industries," Applied Economics, Taylor & Francis Journals, vol. 44(18), pages 2373-2391, June.
    4. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-245, May.
    5. Eaton, Jonathan & Kortum, Samuel, 2001. "Technology, trade, and growth: A unified framework," European Economic Review, Elsevier, vol. 45(4-6), pages 742-755, May.
    6. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    8. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 31-66.
    9. Head, Keith & Ries, John, 2002. "Offshore production and skill upgrading by Japanese manufacturing firms," Journal of International Economics, Elsevier, vol. 58(1), pages 81-105, October.
    10. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    11. Ekholm, Karolina & Hakkala, Katariina, 2005. "The Effect of Offshoring on Labor Demand: Evidence from Sweden," Working Paper Series 654, Research Institute of Industrial Economics.
    12. Sven W. Arndt, 1998. "Super‐Specialization And The Gains From Trade," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 480-485, October.
    13. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    14. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
    15. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, February.
    16. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
    17. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
    18. Johansson, Sara, 2007. "R&D Accessibility and Comparative Advantages in Quality Differentiated Goods," Working Paper Series in Economics and Institutions of Innovation 107, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    19. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    20. Kamal Abd-el-Rahman, 1991. "Firms’ competitive and national comparative advantages as joint determinants of trade composition," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(1), pages 83-97, March.
    21. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 026210086x.
    22. Neil Foster-McGregor & Robert Stehrer & Gaaitzen Vries, 2013. "Offshoring and the skill structure of labour demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 631-662, December.
    23. Feenstra, Robert C. & Jensen, J. Bradford, 2012. "Evaluating estimates of materials offshoring from US manufacturing," Economics Letters, Elsevier, vol. 117(1), pages 170-173.
    24. John H Dunning, 1980. "Towards an Eclectic Theory of International Production: Some Empirical Tests," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(1), pages 9-31, March.
    25. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
    26. Paul, Catherine J Morrison & Siegel, Donald S, 2001. " The Impacts of Technology, Trade and Outsourcing on Employment and Labor Composition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(2), pages 241-264, June.
    27. repec:fth:bosecd:110 is not listed on IDEAS
    28. Eaton, Jonathan & Kortum, Samuel, 1999. "International Technology Diffusion: Theory and Measurement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 537-570, August.
    29. Jane Korinek & Patricia Sourdin, 2011. "To What Extent Are High-Quality Logistics Services Trade Facilitating?," OECD Trade Policy Papers 108, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Warda, Peter, 2014. "Offshoring, Occupations and Job Tasks: Evidence from Swedish Manufacturing," Working Paper Series in Economics and Institutions of Innovation 375, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    2. Rosario Crinò, 2009. "Offshoring, Multinationals And Labour Market: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 197-249, April.
    3. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    4. Agnese, Pablo, 2009. "Japan and her dealings with offshoring: An empirical analysis with aggregate data," MPRA Paper 16505, University Library of Munich, Germany.
    5. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.
    6. Catherine Laffineur & El Mouhoud, 2015. "The jobs at risk from globalization: the French case," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 477-531, August.
    7. Luisa Gagliardi & Simona Iammarino & Andrés Rodríguez-Pose, 2015. "Offshoring and the Geography of Jobs in Great Britain," SERC Discussion Papers sercd0185, Spatial Economics Research Centre, LSE.
    8. Paolo Epifani & Gino Gancia, 2008. "The Skill Bias of World Trade," Economic Journal, Royal Economic Society, vol. 118(530), pages 927-960, July.
    9. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    10. Horgos, Daniel, 2009. "Labor market effects of international outsourcing: How measurement matters," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 611-623, October.
    11. Ronald B. Davies & Rodolphe Desbordes, 2012. "Greenfield FDI and skill upgrading," Working Papers 201209, School of Economics, University College Dublin.
    12. Farole, Thomas & Hollweg, Claire & Winkler, Deborah, 2018. "Trade in Global Value Chain: An Assessment of Labor Market Implication," Jobs Group Papers, Notes, and Guides 30318036, The World Bank.
    13. Rosario Crinò, 2012. "Service Offshoring and the Skill Composition of Labour Demand," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(1), pages 20-57, February.
    14. Elia, Stefano & Mariotti, Ilaria & Piscitello, Lucia, 2009. "The impact of outward FDI on the home country's labour demand and skill composition," International Business Review, Elsevier, vol. 18(4), pages 357-372, August.
    15. Nathalie Chusseau & Joël Hellier, 2012. "Globalisation and Inequality: Where do we stand?," Journal of Income Distribution, Ad libros publications inc., vol. 21(3-4), pages 7-34, November.
    16. Joseph Francois & Douglas R. Nelson, 2000. "Victims of Progress: Economic Integration, Specialization, and Wages for Unskilled Labor," Tinbergen Institute Discussion Papers 00-065/2, Tinbergen Institute.
    17. Martin Andersson & Sara Johansson & Hans Lööf, 2012. "Firm Performance and International Trade – Evidence from a Small Open Economy," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), The Regional Economics of Knowledge and Talent, chapter 13, Edward Elgar Publishing.
    18. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    19. Rosario Crinò, 2010. "Service Offshoring and White-Collar Employment," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 595-632.
    20. David Hummels & Jakob R. Munch & Chong Xiang, 2018. "Offshoring and Labor Markets," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 981-1028, September.

    More about this item

    Keywords

    Labor decomposition; labor composition; imports; quality of imports; manufacturing;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:cesisp:0322. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/cekthse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vardan Hovsepyan (email available below). General contact details of provider: https://edirc.repec.org/data/cekthse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.