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Labor Demand: The Role of Imports in Production

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  • Peter Warda

Abstract

Can import quality affect firms' labor demand? In this article I analyze how high- and low-quality imports affect labor demand in importing firms in Swedish manufacturing. The largest variation is observed in medium- and large-sized firms. In large firms, an increase in high-quality imports on average reduces the demand for highly educated labor-a substitution effect in production. In medium-sized firms, the effect is the opposite, thus indicating production complementarities. The largest effect, however, is observed in micro-sized firms, where a 1% increase in high-quality imports on average increases the amount of highly educated labor by 0.021%. High- and low-quality imports tend to affect the demand for low-educated labor positively in all firm size categories, hence favoring complementarity effects in production.

Suggested Citation

  • Peter Warda, 2014. "Labor Demand: The Role of Imports in Production," The International Trade Journal, Taylor & Francis Journals, vol. 28(4), pages 363-386, October.
    • Handle: RePEc:taf:uitjxx:v:28:y:2014:i:4:p:363-386
    DOI: 10.1080/08853908.2014.898603
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