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Foreign Direct Investment and Wage Inequality: Evidence from China

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  • Chen, Zhihong
  • Ge, Ying
  • Lai, Huiwen

Abstract

Summary This study provides micro-level evidence on the close link between foreign participation and wage inequality. We investigate the wage premium and the wage spillover effect of foreign-invested enterprises in the Chinese manufacturing sector. The results indicate a significant foreign premium in both wage and non-wage compensation. The presence of foreign and Hong Kong, Macao and Taiwan (HMT) investment results in a significantly negative spillover in terms the wage level in domestic firms, and discourages wage growth in such firms. Overall, the evidence suggests that exposure to foreign investment increases inter-enterprise wage inequality.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 8 (August)
Pages: 1322-1332

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:8:p:1322-1332

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: wage inequality globalization Asian China;

References

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Citations

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Cited by:
  1. Nathalie Chusseau & Joël Hellier, 2012. "Globalization and Inequality: Where do we stand?," Working Papers 279, ECINEQ, Society for the Study of Economic Inequality.
  2. Nathalie Chusseau & Joël Hellier, 2012. "Inequality in Emerging Countries," Working Papers hal-00993411, HAL.
  3. Theresa M. Greaney & Yao Li, 2013. "Trade, Foreign Direct Investment and Wage Inequality in China: A Heterogeneous Firms Approach," Working Papers 201306, University of Hawaii at Manoa, Department of Economics.
  4. Dahai Fu & Yanrui Wu, 2011. "Export Wage Premium in China's Manufacturing Sector: A Firm Level Analysis," Economics Discussion / Working Papers 11-22, The University of Western Australia, Department of Economics.
  5. Rickne, Johanna, 2013. "Labor market conditions and social insurance in China," China Economic Review, Elsevier, vol. 27(C), pages 52-68.
  6. Anwar, Sajid & Sun, Sizhong, 2012. "FDI and market entry/exit: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(5), pages 487-498.
  7. Fu, Dahai & Wu, Yanrui, 2011. "Exporting wage premium in the exporting sector: evidence from manufacturing firms in China," MPRA Paper 32721, University Library of Munich, Germany.
  8. Vandeplas, Anneleen & Minten, Bart & Swinnen, Johan F.M., 2012. "Multinationals versus cooperatives: The income and efficiency effects of supply chain governance in India," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126892, International Association of Agricultural Economists.
  9. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper 50945, University Library of Munich, Germany.
  10. Anwar, Sajid & Sun, Sizhong, 2012. "Trade liberalisation, market competition and wage inequality in China's manufacturing sector," Economic Modelling, Elsevier, vol. 29(4), pages 1268-1277.

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