Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Abstract: We present a theoretical framework that explains how the wage in one production location in a multinational firm affects labour demand in other production locations through two effects: the relocation effect and the output effect. Second, we use data on Danish multinationals in order to estimate labour demand in the Danish part of these firms. The results indicate a (weak) substitutionary relationships between workers in Denmark and other high-income countries. However, labour demand in the Danish part of the firms seems to be independent of the wage costs in low-income countries.

Keywords: multinational firms; production location; labour demand

JEL-codes: A10

Language: English

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