Etla » employment

How foreign companies in Finland differ from Finnish-owned enterprises? (In Finnish with English abstract)

Ville Kaitila — Thu, 11 Oct 2012 08:27:08 +0000

We analyse foreign-owned companies operating in Finland and compare them with domestic non-multinational firms while controlling separately for domestic multinational firms. The statistical and micro-econometric analysis is done using Statistics Finland data that contain all firms with at least ten employees in 1998–2008, partly in 1995–2010. We also control for a number of exogenous factors. According to the results, foreign-owned firms have higher productivity than domestic non-multinational firms. There is no difference in the average growth rate of productivity if the difference in levels is not controlled. Accordingly, a shift to foreign ownership has, on average, not affected the growth rate of productivity. The results concerning the growth rate of employment depend upon the method and timespan used in the analysis. The personnel of foreign-owned firms have a longer and higher education than the personnel of domestic non-multinational firms. Foreign-owned firms pay more direct taxes in relation to the number of their employees, which is partly due to these firms’ higher productivity. The probability of becoming a target of a foreign acquisition is higher for medium-sized and large Finnish firms with high productivity than other firms.

Asevelvollisuus ja työmarkkinat: Varusmiespalveluksen vaikutus koulutukseen, työllisyyteen ja palkkaan

admin — Fri, 30 Mar 2012 11:00:00 +0000

We study the effects of compulsory military service in Finland on the conscripts future labour market behaviour. This is measured in three ways : first, the time it takes to complete civil education and the level of education acquired; second, how the conscripts will find employment; and third, their wage level. In order to do this, the Finnish armed forces information on the conscripts who performed their military service in 1998 is combined with the labour market data of Statistics Finland. According to the results, there is a statistically significant connection between military service and future labour market position. Especially, the grade given to conscripts upon completing their service has a very clear positive connection to the future labour market position. In this kind of evaluation it is vital to control for the selection bias emerging from the fact that the most able persons are selected by the military to get more advanced levels of military training. Thus we evaluate the effects both by means of instrumental variables and matching. The former method shows that a longer military training does not have a statistically significant effect on the future wage level, while the latter gives the result that platoon leader training will lead to a 20 per cent higher wage level within 10 years after the military service. We further find that longer military service does not prolong the attainment of civil education and does not cause a reduction in employment within this time span.

Omistajuuden vaikutus suomalaisen työllisyyden kasvuun ja pysyvyyteen

admin — Wed, 16 Mar 2011 11:00:00 +0000

The study investigates empirically how ownership affects firms domestic employment and its fluctuations. We look at six different ownership categories : first generation family businesses, second generation (or older) family businesses, state-owned companies, foreign-owned companies, publicly listed companies, and others (e.g. co-operatives and non-listed, non-family companies). It turns out that ownership matters. Volatility of employment in listed companies is much higher than in other firms. State-owned companies show the highest stability in employment, and they have also reduced their personnel less than others during the economic crisis of 2008-2009. The group of second generation family businesses shows higher stability of employment than first generation. Family businesses (especially the second or subsequent generation enterprises) are typically not high-growth firms. They seem to prefer stability over swift growth.

Suhdanne- ja rakennekriisi yhtä aikaa? Toimiala- ja yritysrakenteen muutokset taantumassa

Mika Maliranta — Mon, 21 Feb 2011 11:00:00 +0000

The study shows that the exceptional drop in volume of Finlands GDP in 2009 as much as 8 per cent was to a large extent due to huge decline in exports and production of one industry, ICT. The contribution of ICT (or electronics and electro-technical industry) to GDP decline was close to two percentage points. The reduction of the industrys value added resulted, again, from the dramatic deterioration of profits (capital income). Nokia is by far the biggest player in the industry (more than half of the value added), and the decline of profits is mainly due to Nokia. Since 80-90 per cent of Nokias shares is owned by foreigners, the consequences of profit and value added decline are felt mainly outside Finland. Similarly, when the values added and profits grew in the early 2000s, the contribution to GDP growth was overestimated. The reason is that national accounting does not take into account the ownership structure of accumulated retained profits. However, as a result of the crisis the Finnish economy has experienced a permanent decline in its potential production.

Revealed Technological Advantage of the Finnish Industry

Mika Pajarinen — Mon, 08 Feb 2010 11:00:00 +0000

This study analyzes trends in specialization of the Finnish industry since the 1980s. Low technology industries, such as pulp and paper, have had traditionally a large proportion of the Finnish industrial output. During the recent decades their share of output has decreased significantly and Finland has specialized more and more in high technology industries, especially in ICT. The pattern of the Finnish revealed technological advantage with focus on ICT, and pulp and paper technologies differs from the pattern of the revealed technological advantage of many other countries. Internationally compared Finland has some technological advantage also in special purpose machinery, such as papermaking machines, special purpose vessels, elevators and transfer equipments, and in basic metals.

The Impact of Technological and Non-Technological Innovations on Firm Growth

admin — Thu, 13 Nov 2008 11:00:00 +0000

This study investigates the relationship between innovations and firm growth, based on the data of Finnish firms operating in the software industry. We find that in terms of turnover and employment, firms with only technological innovations do not grow more rapidly than other firms. However, firm growth is positively associated with the combination of technological and non-technological innovations.

Domestic R&D Employment Effects of Offshoring R&D Tasks: Some Empirical Evidence from Finland

admin — Thu, 06 Nov 2008 11:00:00 +0000

This study empirically explores whether R&D offshoring affects the domestic R&D employment at the firm level. Overall, the Finnish survey data suggest that the impact of R&D internationalization on domestic R&D employment depends on the mode of internationalization (in-house offshoring vs. offshore outsourcing vs. in-house expansion of R&D abroad). Moreover, manufacturing and service firms are found to be different when it comes to R&D internationalization and its domestic employment effects. In the manufacturing sector, especially in-house offshoring of R&D has a significant negative impact on the plan to increase R&D employment. But the relationship between the in-house expansion of R&D abroad and domestic R&D employment turns out to be complementary. In the service sector, it is in the first place offshore outsourcing of R&D that has a significant negative impact on the plan to increase R&D employment. A final result supports the view that R&D does not always follow production but that a strong location link between production and R&D does have a significant negative effect on the domestic R&D employment.

The Home Country Employment Effects of Internationalisation – A Literature Review

admin — Tue, 02 Sep 2008 11:00:00 +0000

This report reviews some of the most recent literature examining the home country employment effects of internationalisation. A brief overview of the history of the internationalisation of Finnish firms is also presented. The general conclusion from the literature is that the absolute employment effects are modest, although there are likely to be notable effects on the structure of labour demand. However, the form of internationalisation, the level of aggregation of the data, and differences in labour market institutions all have an influence on the results. Most of the studies looking at the employment effects of outward foreign direct investment on the home country seem to indicate positive rather than substitution effects. On the other hand, when looking at the effects of offshore outsourcing, the results are ambiguous.

Tax/benefit Systems and Growth Potential of the EU

admin — Thu, 14 Feb 2008 11:00:00 +0000

The EU has ambitious goals in terms of economic performance. The goals are to be reached in combination with social cohesion and sustainable development in terms of environment. The key economic policy instruments to be used by the EU member states are comprised of taxes and benefits. The economic and political framework for carrying out measures in this field is currently delineated, both encouraged and constrained, by factors such as ageing, globalisation and more intense international system competition in tax and social policies.

The aim of the project Tax/benefit systems and potential growth of the EU – TAXBEN (SCS8-CT-2004-502639), as outlined in SSP Priority 8 Topic 3.1. Task 4, has been to carry out an in-depth analysis of tax/benefit policies in five broad themes, where these policies play a crucial role in terms of the key EU goals : Employment; Corporate taxes under tax competition; Productivity growth and convergence; Macroeconomic policies under a single monetary policy; and Environment and climate change. The project was carried out by seven European economic policy research institutes within the ENEPRI (European Network of Economic Policy Research Institutes) network.

The project team has used many novel approaches, especially in building new tools that rely on the approach of general equilibrium models so that both the direct and indirect effects of taxation can be analysed. Also new applications of existing large-scale multi-country models were carried out to evaluate the impact of tax policies. In addition, recourse was taken to econometric estimation of the relationships between key economic target variables, on the one hand, and tax/benefit and other fiscal policies and other labour market indicators, on the other, using large international data sets. A number of theoretical approaches on economic policies under the single currency were carried out, too. The analysis covered the EU-15 countries, the New Member States, in some cases other OECD countries as well, and some research efforts made had a global approach to policy making.

Altogether, the projects output was 24 working papers in the five Work packages, and five seminars held, in addition to the Final Conference. The project delivered, on the one hand, a large number of research insights on actual behaviour related to tax/benefit systems and, on the other hand, reached conclusions which should be taken into account while considering policy-making in, and reforms related to, tax/benefit policies in the EU.

The projects web site at www.taxben.org provides detailed information on the whole output and events arranged within the project. Contact person is Kari E.O. Alho : Kari.Alho@etla.fi, scientific co-ordinator of TAXBEN.

The Impact of Foreign Ownership on Company Growth

Jyrki Ali-Yrkkö — Mon, 02 Apr 2007 11:00:00 +0000

This study analyses foreign-owned companies operating in Finland.
Between 2001 and 2003 760 foreign companies either established a new site or
acquired an existing unit in Finland. The goal of this paper is to study the develop-
ment of these units. The results of statistical analyses are two-fold. First, estab-
lished foreign-owned units (greenfields) have increased their employment annually
on average 13-15 percent more than domestic-owned units established in the same
period. Furthermore in terms of net sales, foreign-owned units grew, on average,
10-12 percent more rapidly than domestic units. Second, the impact of foreign
ownership differs between greenfield investment and acquisitions. The results sug-
gest that the impact of ownership change on employment and on net sales is simi-
lar in domestic-to-foreign deals as in other deals.