Discussion paper

DP2323 Swedish Multinationals and Competition from High- and Low-Wage Locations

This study uses data on Swedish multinationals to estimate cross elasticities of labour demand in different locations. With a vertical decomposition of the firm's activities, whether there is substitution or complementarity between employment in different parts of the firm will depend on whether wage changes lead to a relocation of activities or simply to changes in marginal costs and/or demand for inputs in other parts of the firms. We find that there is some evidence of a substitutionary relationship between employment in the Swedish parts of the firms and employment in other high-income locations, but we do not find any evidence of substitution stemming from employment in low-income locations. We find mainly a relationship of complementarity between employment in different affiliates.

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Citation

Ekholm, K and H Braconier (1999), ‘DP2323 Swedish Multinationals and Competition from High- and Low-Wage Locations‘, CEPR Discussion Paper No. 2323. CEPR Press, Paris & London. https://cepr.org/publications/dp2323