Umeå Economic Studies
No 638: Foreign ownership and effects on employment and wages: The case of Sweden
Runar Brännlund (Runar.Brannlund@econ.umu.se), Jonas Nordström (Jonas.Nordstrom@econ.umu.se) and Dick Svedin (Dick.Svedin@mh.se)
Abstract: In this paper we study how foreign ownership of Swedish companies affect employment and wage setting. To study the effects we specify a model that is essentially based on the assumption that the Swedish labour market can be described as a market where trade unions and employers bargain over both wage and employment. Our hypothesis is that the bargaining power is affected by institutional settings and the ownership of the firm. The data we used to test our hypothesis is a panel data set including nearly 200 firms, spanning over the period 1980-1994. The results indicate that foreign ownership has no significant effect on employment, whereas the effect on wages is significantly positive.
Keywords: Bargaining power; foreign direct investment; employment; trade union, wages.
JEL-Codes: J30; J50; D21; C33..
22 pages, Revised November 1, 2004.
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