FDI and Income Inequality: Evidence from Europe
AbstractThis paper examines the effects of inward and outward FDI on income inequality in Europe using panel cointegration techniques and unbalanced panel regressions. Our main result is that both inward FDI and outward FDI have, on average, a negative long-run effect on income inequality. This result is robust to alternative estimation methods, potential outliers, different measures of FDI and inequality, and period and sample selection. Other findings are: (i) While the long-run effect of inward and outward FDI on income inequality is clearly negative, their short-run effect appears to be positive. (ii) Long-run causality runs in both directions, suggesting that an increase in inward and outward FDI reduces income inequality in the long run, and that, in turn, a reduction in inequality leads to an increase in inward and outward FDI. (iii) There are large cross-country differences in the long-run effects of inward and outward FDI on income inequality; for some countries the long-run effects on income inequality are positive
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1675.
Length: 21 pages
Date of creation: Jan 2011
Date of revision:
FDI; income inequality; panel co-integration; Europe;
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guillaume Daudin & Christine Rifflart & Danielle Schweisguth, 2009.
"Who produces for whom in the world economy?,"
Documents de Travail de l'OFCE
2009-18, Observatoire Francais des Conjonctures Economiques (OFCE).
- Hans-Werner Sinn, 2006.
"The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle,"
The World Economy,
Wiley Blackwell, vol. 29(9), pages 1157-1175, 09.
- Hans-Werner Sinn, 2006. "The Pathological Export Boom and the Bazaar Effect - How to Solve the German Puzzle," CESifo Working Paper Series 1708, CESifo Group Munich.
- Prema-chandra Athukorala, 2011.
"Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?,"
Asian Economic Papers,
MIT Press, vol. 10(1), pages 65-95, January.
- Athukorala, Prema-chandra, 2010. "Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?," Working Papers on Regional Economic Integration 56, Asian Development Bank.
- Kim, Soyoung & Lee, Jong-Wha & Park, Cyn-Young, 2010. "The Ties that Bind Asia, Europe, and United States," ADB Economics Working Paper Series 192, Asian Development Bank.
- Park, Donghyun & Shin, Kwanho, 2009.
"Can Trade with the People’s Republic of China be an Engine of Growth for Developing Asia?,"
ADB Economics Working Paper Series
172, Asian Development Bank.
- Park, Donghyun & Shin, Kwanho, 2010. "Can Trade with the People’s Republic of China Be an Engine of Growth for Developing Asia ," Asian Development Review, Asian Development Bank, vol. 27(1), pages 160-181.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dieter Stribny).
If references are entirely missing, you can add them using this form.