Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals |
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| Authors: | Email author" target="_blank">Sascha O?BeckerEmail author Karolina?Ekholm Robert?J?ckle Marc-Andreas?Muendler |
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| Institution: | (1) Center for Economic Studies, University of München, Schackstr. 4, 80539 München, Germany;(2) Stockholm School of Economics, Stockholm, Sweden;(3) Ifo Institute, München, Germany;(4) University of California, San Diego, CA, USA |
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| Abstract: | Using data on German and Swedish multinational enterprises (MNEs), this paper analyzes determinants of location choice and
the degree of substitutability of labor across locations. Countries with highly skilled labor 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 760 fewer jobs
at German parents and 4,620 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.
JEL no. F21, F23, J21, J23 |
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| Keywords: | Multinational enterprises location choice multinomial choice labor demand translog cost function |
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