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

Author

Listed:
  • 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.

Suggested Citation

  • Brännlund, Runar & Nordström, Jonas & Svedin, Dick, 2004. "Foreign ownership and effects on employment and wages: The case of Sweden," Umeå Economic Studies 638, Umeå University, Department of Economics, revised 01 Nov 2004.
    • Handle: RePEc:hhs:umnees:0638
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    References listed on IDEAS

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    2. Brian Aitken & Ann Harrison & Robert E. Lipsey, 2022. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 4, pages 61-87, World Scientific Publishing Co. Pte. Ltd..
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    12. Minsik Choi, 2001. "Threat Effect of Foreign Direct Investment on Labor Union Wage Premium," Working Papers wp27, Political Economy Research Institute, University of Massachusetts at Amherst.
    13. Minsik Choi, 2003. "Inward Foreign Direct Investment and Inter-Industry Wage Differentials In U.S. Manufacturing Industries," Working Papers wp67, Political Economy Research Institute, University of Massachusetts at Amherst.
    14. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291.
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    Cited by:

    1. Bandick, Roger & Karpaty, Patrick, 2007. "Foregin Acquisition and Employment Effects in Swedish Manufacturing," Working Papers 2007:10, Örebro University, School of Business.
    2. Bandick, Roger & Karpaty, Patrik, 2011. "Employment effects of foreign acquisition," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 211-224, April.

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    More about this item

    Keywords

    Bargaining power; foreign direct investment; employment; trade union; wages.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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