Does Foreign Direct Investment Affect Wage Inequality? An Empirical Investigation

21 Pages Posted: 28 Sep 2011

See all articles by Paolo Figini

Paolo Figini

University of Bologna - Department of Economics; University of Bologna - CAST - Centre for Advanced Studies in Tourism

Holger Go¨rg

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: September 2011

Abstract

We use a panel of more than 100 countries for the period 1980–2002 to analyse the relationship between inward foreign direct investment (FDI) and wage inequality. We particularly check whether this relationship is nonlinear, in line with a theoretical discussion. We find that the effect of FDI differs according to the level of development: we depict two different patterns, one for OECD (developed) and one for non‐OECD (developing) countries. Results suggest the presence of a nonlinear effect in developing countries: wage inequality increases with FDI inward stock, with such effect diminishing with further increases in FDI. For developed countries, wage inequality decreases with FDI inward stock, and there is no robust evidence to show that this effect is nonlinear.

Suggested Citation

Figini, Paolo and Go¨rg, Holger, Does Foreign Direct Investment Affect Wage Inequality? An Empirical Investigation (September 2011). The World Economy, Vol. 34, Issue 9, pp. 1455-1475, 2011, Available at SSRN: https://ssrn.com/abstract=1934629 or http://dx.doi.org/10.1111/j.1467-9701.2011.01397.x

Paolo Figini (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

HOME PAGE: http://www2.dse.unibo.it/dsa/profile.php?id=33

University of Bologna - CAST - Centre for Advanced Studies in Tourism ( email )

Via Angherà 22
Rimini, RN 47922
Italy

Holger Go¨rg

affiliation not provided to SSRN

No Address Available

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