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International Production Networks in the Nordic/Baltic Region

Author

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  • Karolina Ekholm
  • Katarina Hakkala

Abstract

The Nordic countries are characterized by relatively compressed wage structures, implying that the incentives to offshore activities intensive in low-skilled labour might be particularly strong in these countries. In this paper, we document the recent changes in measures of offshoring and find that there has been an overall increase since the mid 1990s but that the experience varies considerably across sectors. We also document the recent trends in wage-bill shares of workers with different levels of educational attainment. As in most industrialized countries, there has been an overall increase in the wage-bill share of highly educated workers, a development that is relatively uniform across sectors. In an econometric analysis we estimate the relationship between offshoring of intermediate input production and labour demand in Sweden, Finland and Norway, distinguishing between workers with different educational attainments. We only find weak relationships. In this sense, the results suggest that the gains from an increased specialisation due to fragmentation of production and the emergence of production networks involving low-wage countries are reaped without any large adverse effects on income distribution. For Sweden, we find that offshoring to low-income countries is associated with a shift in demand towards workers with a relatively high level of education. For Finland, however, it is rather offshoring to high-income countries that is associated with such a shift. Moreover, in the Swedish case the shift is away from workers with upper secondary education whereas in the Finnish case it is away from workers with lower secondary education.

Suggested Citation

  • Karolina Ekholm & Katarina Hakkala, 2008. "International Production Networks in the Nordic/Baltic Region," OECD Trade Policy Papers 61, OECD Publishing.
  • Handle: RePEc:oec:traaab:61-en
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    File URL: http://dx.doi.org/10.1787/244775460654
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    Cited by:

    1. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    2. Bank for International Settlements, 2010. "Globalisation, labour markets and international adjustment - Essays in honour of Palle S Andersen," BIS Papers, Bank for International Settlements, number 50, November.

    More about this item

    Keywords

    Baltic; labour demand; manufacturing; Nordic; outsourcing; skill upgrading;

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