Publication

Using data for German and Swedish multinational enterprises (MNEs), this paper assesses international employment patterns and analyzes determinants of location choice and the degree of substitutability of labor across locations. The authors find that whereas German MNEs are attracted to countries with highly skilled labor forces, no such evidence exists for Swedish MNEs. In either country, affiliate employment tends to substitute for employment at the parent firm. The authors furthermore provide a calculation of the effects that wage gaps between the locations of the parent firms and Central and Eastern Europe have on employment.