Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297253 
Year of Publication: 
2023
Series/Report no.: 
IFN Working Paper No. 1457
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
Is technology or trade driving increases in wage inequality? We propose that technology interacts with trade in the form of foreign direct investments to widen domestic wage inequality. We show that foreign acquisitions of domestic firms disproportionately affect wages for workers who perform tasks sensitive to the technology specialization (software or robotics) of the acquiring firm. Based on Swedish matched employer-employee data covering two decades and staggered difference-indifferences methods we find wages to decline by up to 5.2% annually over an eight-year post period. Our results suggest that a trade policy aimed at attracting foreign companies with high technological capabilities can help countries advance technologically, but this may come at the cost of increased domestic wage inequality.
Subjects: 
Foreign Direct Investments
Automation
Inequality
AI
Robots
Technology
Trade
Mergers and Acquisitions
Multinational firms
Wages
JEL: 
F23
G34
J30
R10
Document Type: 
Working Paper

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