Abstract
In this paper, we study how foreign ownership of Swedish companies affects employment and wages. To study these effects, we specify a model based on the assumption that the Swedish labour market ca ...
Highlights
1 Introduction The purpose of this paper is to examine how foreign ownership of companies acting in Sweden has affected the employment and wage setup
If we study the wage equation first, we can see from Table 1 that a higher reservation wage will increase wages, as expected; a 1 % increase in the reservation wage increases the actual wage by a quarter of a per cent
The results indicate that the point estimate of trade unions’ bargaining power over wages is greater than the point estimate of their bargaining power over employment
Summary
The purpose of this paper is to examine how foreign ownership of companies acting in Sweden has affected the employment and wage setup. Sweden has a tradition of labour market agreements such as collective bargaining between unions and employers, the assumption in the present paper is that foreign-owned firms are not as committed to this “social contract” as domestically owned firms are, which makes the threat of foreign-owned business activities moving out of Sweden credible. This line of reasoning reflects public debate on this issue. At the end of 2005, over 20 % of all employees in Sweden were working for foreign-owned firms; for the manufacturing sector studied here, the share was substantially higher
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