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Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals

Author

Listed:
  • Sascha Becker
  • Karolina Ekholm
  • Robert Jäckle
  • Marc-Andreas Muendler
  • Sascha O. Becker

Abstract

Using data on German and Swedish multinational enterprises (MNEs), this paper analyzes determinants of international location choice and the degree of substitutability of labor across locations. Countries with highly skilled labor forces strongly attract German but not necessarily Swedish MNEs. In MNEs from either country, affiliate employment tends to substitute for employment at the parent firm. At the margin, substitutability is the strongest with respect to affiliate employment in Western Europe. A one percent larger wage gap between Germany and locations in Central and Eastern Europe (CEE) is associated with 900 fewer jobs at German parents and 5,000 more jobs at affiliates in CEE. A one percent larger wage gap between Sweden and CEE is associated with 140 fewer jobs at Swedish parents and 260 more jobs at affiliates in CEE.

Suggested Citation

  • Sascha Becker & Karolina Ekholm & Robert Jäckle & Marc-Andreas Muendler & Sascha O. Becker, 2005. "Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals," ifo Working Paper Series 4, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_4
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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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