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The effect of FDI on low and high-skilled employment and wages in Mexico: a study for the manufacture and service sectors

Author

Listed:
  • Eduardo Saucedo

    (Tecnologico de Monterrey)

  • Teofilo Ozuna

    (Tecnologico de Monterrey)

  • Hector Zamora

    (Deloitte Mexico)

Abstract

This study analyzes the effect of Foreign Direct Investment (FDI) inflows on the employment and wages of low- and high-skilled employees in the manufacture and service sectors in Mexico. The study implements a quarterly panel dataset covering the 32 Mexican states from 2005 to 2018. The econometric model is estimated throughout Fixed-Effects (FE) and Panel Corrected Standard Errors (PCSE). Employment results indicate that an increase of FDI inflows into the manufacture sector creates a positive effect in low- and high-skilled employment. In the case of service sector, results are inconclusive across models for both categories of employment. In the case of wages, it is found that FDI inflows by the manufacture sector increase marginally in low-skilled wages and no statistical effect is captured in high-skilled wages. Lastly, in service sector, results indicate the effect of FDI inflows are inconclusive in the case of low-skilled and high-skilled wages.

Suggested Citation

  • Eduardo Saucedo & Teofilo Ozuna & Hector Zamora, 2020. "The effect of FDI on low and high-skilled employment and wages in Mexico: a study for the manufacture and service sectors," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-15, December.
    • Handle: RePEc:spr:jlabrs:v:54:y:2020:i:1:d:10.1186_s12651-020-00273-x
    DOI: 10.1186/s12651-020-00273-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Foreign Direct Investment; Employment; Mexico; Panel data;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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