Foreign Acquisition and Employment Effects in Swedish Manufacturing

University of Nottingham Research Paper No. 2007/35

28 Pages Posted: 16 Nov 2007

See all articles by Patrik Karpaty

Patrik Karpaty

University of Nottingham; Örebro University

Roger Bandick

Örebro University

Date Written: November 2007

Abstract

This paper investigates the employment effects of foreign acquisitions in acquired firms in Swedish manufacturing during the 1990s, a period characterized by a dramatic increase in foreign ownership. To handle likely endogeneity problems, we evaluate the effects of foreign acquisitions on the targeted firms' employment by combining propensity score matching with difference-in-difference estimation. We find some evidence of positive employment effects in firms taken over by foreigners and it seems that the employment of skilled labor increases more than the employment of less-skilled labor. Moreover, we examine whether the employment impact of foreign ownership differs between takeovers of Swedish MNEs and non-MNEs. Our results indicate that the positive employment effects only appear in acquired non-MNEs. Furthermore, we observe shifts in skill intensities toward higher shares of skilled labor in non-MNEs taken over by foreign MNEs but not in acquired Swedish MNEs.

Keywords: Foreign acquisitions, labor demand, matching, difference - in difference, multinational enterprises

JEL Classification: F16, F23, J23

Suggested Citation

Karpaty, Patrik and Bandick, Roger, Foreign Acquisition and Employment Effects in Swedish Manufacturing (November 2007). University of Nottingham Research Paper No. 2007/35, Available at SSRN: https://ssrn.com/abstract=1030512 or http://dx.doi.org/10.2139/ssrn.1030512

Patrik Karpaty

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Örebro University ( email )

Sköldvägen 6 151 53 Södertälje
SE-70182 Orebro
Sweden

Roger Bandick (Contact Author)

Örebro University ( email )

Sköldvägen 6 151 53 Södertälje
Sweden

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