Foreign Direct Investment, Wage Inequality and Skilled Labour Demand in EU Accession Countries

Foreign Direct Investment, Wage Inequality and Skilled Labour Demand in EU Accession Countries
Author: Anna M. Falzoni
Publisher:
Total Pages: 0
Release: 2005
Genre:
ISBN:

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During the 1990s Poland, Hungary and the Czech Republic have experienced rapid increases in wage inequality between skilled and unskilled workers and received the largest FDI inflow in Central and Eastern Europe. This paper analyzes whether FDI has contributed to the raise in earning inequality via a change in the skill composition of labor demand in the three countries. While we find that in Hungary and the Czech Republic FDI exerts a positive direct impact on the skill-premium, in none of the countries considered FDI has worsened wage inequality by favoring labor demand shifts.

International Economic Activities and the Demand for Skilled Labor

International Economic Activities and the Demand for Skilled Labor
Author: Pablo Fajnzylber
Publisher: World Bank Publications
Total Pages: 48
Release: 2004
Genre: International economic integration
ISBN:

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"Increases in international economic integration can lead to greater specialization according to comparative advantage, but also to the diffusion of skill-biased technologies. In developing countries characterized by relative abundance of unskilled labor, these factors can have opposite effects on the relative demand for skilled labor. Fajnzylber and Fernandes investigate the impact of the use of imported inputs, exports, and foreign direct investment on the demand for skilled workers by Brazilian and Chinese manufacturing plants. They find that while in Brazil increased levels of international integration are associated with an increased demand for skilled labor, the opposite is true in China. This paper, a product of the Growth and Investment Team, Development Research Group, is part of a larger effort in the group to study the links between globalization and labor markets"-- World Bank web site.

Foreign Direct Investment and Relative Wages

Foreign Direct Investment and Relative Wages
Author: Robert C. Feenstra
Publisher:
Total Pages: 34
Release: 1995
Genre: Income distribution
ISBN:

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In this paper, we examine the increase in the relative wages of skilled workers in Mexico during the 1980s. We argue that rising wage inequality in Mexico is linked to capital inflows from abroad. The effect of these capital inflows, which correspond to an increase in outsourcing by multinationals from the United States and other Northern countries, is to shift production in Mexico towards relatively skill-intensive goods thereby increasing the relative demand for skilled labor. We study the impact of foreign direct investment (FDI) on the share of skilled labor in total wages in Mexico using state-level data on two-digit industries from the Industrial Census for the period 1975 to 1988. We measure the state- level growth in FDI using data on the regional activities of foreign- owned assembly plants. We find that growth in FDI is positively correlated with the relative demand for skilled labor. In the regions where FDI has been most concentrated, growth in FDI can account for over 50 percent of the increase in the skilled labor share of total wages that occurred during the late 1980s

Foreign Direct Investment and Wage Inequality Across and Within Nations

Foreign Direct Investment and Wage Inequality Across and Within Nations
Author: Weiyan Chen
Publisher:
Total Pages: 188
Release: 2002
Genre: Investments, Foreign, and employment
ISBN:

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Foreign direct investment (FDI), the movement of long-term capital, has been increasingly important in the world economy since the early 1970s. Its growth rate outpaces that of trade in goods and gross national product (GNP) during the same period. Prior literature mostly focuses on either the causes (determinants) of FDI or its relationships with trade and economic growth. This dissertation investigates the consequences of FDI, especially its empirical effects on wages in developing and developed countries. Moreover, the differential effects of FDI on various types of labor within developing countries are estimated. Using an extension of a specific-factors model, a revenue (GNP) function framework with FDI is derived. From a translog specification of GNP function, the share of labor compensation in GNP is derived as a function of output prices, factor endowments and FDI. Data from the United Nations and the World Bank, for 1975-1995, are used to estimate the labor share equations. Panel estimation procedures, complemented by specification tests and error structure analyses, are used since the data set includes 11 developing and 15 developed countries. Results suggest that inward FDI increases developing countries' wage rate, while outward FDI lowers the wage rate of developed countries. Thus, factor price equalization between developed and developing countries is observed as a result of FDI flows. Moreover, inward FDI raises skilled (non-agricultural) labor's wage, while lowering that of the unskilled (agricultural) labor. Thus, FDI is likely a source of income inequality within developing countries, although the overall wage rate increased due to FDI inflows. The effects of FDI on wage inequality within China are estimated to provide a case study. Results are similar to that of the cross-country case. Overall wage rate in China has increased with more FDI inflows, but the coastal provinces have benefited more than the interior provinces.

Foreign Direct Investment and the Multinational Enterprise

Foreign Direct Investment and the Multinational Enterprise
Author: Steven Brakman
Publisher: MIT Press
Total Pages: 301
Release: 2008
Genre: International business enterprises
ISBN: 0262026457

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The multinational firm and its main vehicle, foreign direct investment, are key forces in economic globalization. Their importance to the world economy can be seen in the fact that since 1990 foreign direct investment has grown more rapidly than the world GDP and world trade. Despite this, the causes and consequences of multinational firm activity are little understood and until recently relatively unexamined in the theoretical literature. This CESifo volume fills this gap, examining the multinational enterprise (MNE) and foreign direct investment (FDI) from both theoretical and empirical perspectives. In the theoretical chapters, leading scholars take a wide range of modern analytical approaches--from new growth and trade theories to new economic geography, industrial organization, and game theory. Taking current theoretical work on MNE and FDI as a starting point and aiming to extend the existing theoretical framework, the contributors consider such topics as investment liberalization and firm location, tax competition, and welfare consequences of FDI and outsourcing. The empirical chapters test several of the key hypotheses of recent theoretical work on MNE and FDI, examining topics that include productivity effects on Italian MNEs, the different effects of outsourcing in Austria and Poland, location decisions of MNEs in the European Union, and other topics. ContributorsOscar Amerighi, Bruce A. Blonigen, Steven Brakman, Davide Castellani, Ronald B. Davies, Alan V. Deardorff, Fabrice Defever, Harry Garretsen, Anders N. Hoffman, Andzelika Lorentowicz, James R. Markusen, Charles van Marrewijk, Dalia Marin, James R. Marukusen, Alireza Naghavi, Helen T. Naughton, Giorgio Barba Navaretti, J. Peter Neary, Gianmarco Ottaviano, Alexander Raubold, Glen R. WaddellSteven Brakman is Professor of Globalization in the Faculty of Economics at the University of Groningen. Harry Garretsen is Professor of International Economics at the Utrecht School of Economics, Utrecht University.

Multinational Companies and Domestic Firms in Europe

Multinational Companies and Domestic Firms in Europe
Author: K. Tijdens
Publisher: Springer
Total Pages: 342
Release: 2013-11-19
Genre: Business & Economics
ISBN: 1137375922

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The Social Effects of FDI on Multinational Companies and Domestic Firms compares and contrasts wages, working conditions and industrial relations processes in multinational and domestic companies. This book is an effort to map the social effects of FDI in a number of EU member states, in relation to the prevailing patterns of internationalization.

Labour Market Effects of European Intergration in the Bavarian and Czech Border Regions

Labour Market Effects of European Intergration in the Bavarian and Czech Border Regions
Author: Michael Moritz
Publisher: wbv Media GmbH & Company KG
Total Pages: 167
Release: 2009-10-12
Genre: Social Science
ISBN: 376394012X

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Welche Auswirkungen hatte der Fall des Eisernen Vorhangs und die ökonomische Integration der mittelosteuropäischen Staaten für den Arbeitsmarkt in den Grenzregionen zwischen den alten und den neuen EU-Mitgliedsstaaten? Michael Moritz geht dieser Frage am Beispiel der bayerisch-tschechischen Grenzregion nach. Moritz untersucht für beide Länder, ob die räumliche Nähe für die Entwicklung der Wirtschafts-, Qualifikations- und Lohnstrukturen in den grenznahen Kreisen eine Rolle spielt und inwieweit sich signifikante Unterschiede zur Entwicklung in den grenzfernen Regionen feststellen lassen. Publikationssprache: Englisch