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The Effect of Foreign Direct Investment on the Urban Wage in China: An Empirical Examination

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  • Ying Ge

    (School of International Trade and Economics, University of International Business and Economics, Huixindongjie, Hepingjie Beikou, Chaoyang District, Beijing, P.R. China, 100029. yige60@vip.sina.com)

Abstract

How does foreign direct investment (FDI) affect the wage levels of cities in a host country? This paper uses a panel dataset of Chinese cities to examine the impact of inward FDI on the urban real wage. The results suggest that the existence of FDI has a significant and positive effect on urban real wages and that this impact remains significant after controlling for other city characteristics. Cross-city variation of FDI intensity is one important factor contributing to intercity wage inequality.

Suggested Citation

  • Ying Ge, 2006. "The Effect of Foreign Direct Investment on the Urban Wage in China: An Empirical Examination," Urban Studies, Urban Studies Journal Limited, vol. 43(9), pages 1439-1450, August.
    • Handle: RePEc:sae:urbstu:v:43:y:2006:i:9:p:1439-1450
    DOI: 10.1080/00420980600831627
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