Domestic jobs and foreign wages

It is plausible that the labour demand decisions of multinational corporati ons (MNCs) depend not only on domestic, but also on foreign labour costs. T his hypothesis is tested by estimating labour demand equations for a sample of Swedish MNCs. Indeed, higher foreign costs increase an MNC's Swedish em ployment and reduce its foreign employment. As MNCs become more important i n many OECD countries, the responsiveness of domestic output and employment to foreign labour costs is likely to increase.