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Swedish Multinationals and Competition from High‐ and Low‐Wage Locations
Author(s) -
Braconier Henrik,
Ekholm Karolina
Publication year - 2000
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00234
Subject(s) - relocation , complementarity (molecular biology) , economics , labour economics , competition (biology) , substitution (logic) , wage , substitution effect , microeconomics , ecology , genetics , computer science , biology , programming language
This study uses data on Swedish multinationals to estimate cross‐elasticities of labor 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. It is found 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 no evidence of substitution stemming from employment in low‐income locations.