Multinationals, skills, and wage elasticities

Katariina Nilsson Hakkala, Fredrik Heyman, Fredrik Sjoholm*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

19 Citations (Scopus)

Abstract

The increase in foreign direct investments raises concerns about labor market consequences in many countries. It is feared that multinational firms are inclined to shift jobs abroad and increase job volatility. We use firm-level data to examine if multinationality and foreign ownership affect the wage elasticity of labor demand. Unlike previous studies, we distinguish the effect on different skill groups of employees. We find no general difference in wage elasticity between foreign and domestic firms but the wage elasticity is higher in multinational firms than in national firms, in particular for medium-skilled workers.

Original languageEnglish
Pages (from-to)263-280
Number of pages18
JournalREVIEW OF WORLD ECONOMICS
Volume146
Issue number2
DOIs
Publication statusPublished - Jun 2010
MoE publication typeA1 Journal article-refereed

Keywords

  • FDI
  • Cross-border acquisitions
  • Multinational enterprises
  • Foreign ownership
  • Labor demand
  • Skill groups
  • LABOR-DEMAND ELASTICITIES
  • FOREIGN DIRECT-INVESTMENT
  • FOOTLOOSE MULTINATIONALS
  • INTERNATIONAL-TRADE
  • PANEL-DATA
  • LIBERALIZATION
  • INEQUALITY
  • EMPLOYMENT
  • MERGERS
  • MODELS

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