Foreign Acquisition and Employment Effects in Swedish Manufacturing
This paper investigates the employment effects of foreign acquisitions in acquired firms in Swedish manufacturing during the 1990s, a period characterized by a dramatic increase in foreign ownership. To handle likely endogeneity problems, we evaluate the effects of foreign acquisitions on the targeted firms’ employment by combining propensity score matching with difference-in-difference estimation. We find some evidence of positive employment effects in firms taken over by foreigners and it seems that the employment of skilled labor increases more than the employment of less-skilled labor. Moreover, we examine whether the employment impact of foreign ownership differs between takeovers of Swedish MNEs and non-MNEs. Our results indicate that the positive employment effects only appear in acquired non-MNEs. Furthermore, we observe shifts in skill intensities toward higher shares of skilled labor in non-MNEs taken over by foreign MNEs but not in acquired Swedish MNEs.
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