Inward FDI and demand for skills in manufacturing firms in Sweden

TY - JOUR

T1 - Inward FDI and demand for skills in manufacturing firms in Sweden

AU - Bandick, Roger

AU - Hansson, Pär

PY - 2009

Y1 - 2009

N2 - We observe a substantial increase in foreign ownership in Sweden in the 1990s. Did that have any effect on relative demand for skilled labor? Has technology transfers-often associated with inward FDI-led to an increased demand for skills due to skilled-biased technical change? Are there any grounds for the concerns in the public Swedish debate that more skilled activities have been moved to other countries where the headquarters are located? Estimating relative labor demand at the firm level and using propensity score matching with difference-in-difference estimation, we obtain support for that relative demand for skilled labor tend to rise in non-multinationals (non-MNEs)-but not in multinationals (MNEs)-that become foreign-owned. Other interesting findings are that larger presence of foreign MNEs in an industry appears to have a positive impact on the relative demand for skills in Swedish MNEs within the same industry and that the elasticity of substitution between skilled and less-skilled labor seems to be lower in MNEs than in non-MNEs.

AB - We observe a substantial increase in foreign ownership in Sweden in the 1990s. Did that have any effect on relative demand for skilled labor? Has technology transfers-often associated with inward FDI-led to an increased demand for skills due to skilled-biased technical change? Are there any grounds for the concerns in the public Swedish debate that more skilled activities have been moved to other countries where the headquarters are located? Estimating relative labor demand at the firm level and using propensity score matching with difference-in-difference estimation, we obtain support for that relative demand for skilled labor tend to rise in non-multinationals (non-MNEs)-but not in multinationals (MNEs)-that become foreign-owned. Other interesting findings are that larger presence of foreign MNEs in an industry appears to have a positive impact on the relative demand for skills in Swedish MNEs within the same industry and that the elasticity of substitution between skilled and less-skilled labor seems to be lower in MNEs than in non-MNEs.

KW - Foreign ownership

KW - Skill upgrading

KW - Wage differentials

U2 - 10.1007/s10290-009-0002-9

DO - 10.1007/s10290-009-0002-9

M3 - Journal article

SN - 1610-2878

VL - 145

SP - 111

EP - 131

JO - Review of World Economics

JF - Review of World Economics

IS - 1

ER -