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FDI activity and worker compensation: evidence from U.S. non-manufacturing industries

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  • Eren, Ozlem
  • Peoples, James

Abstract

This study examines worker compensation effects of foreign direct investment (FDI) activity in US non-manufacturing industry sectors. A clustered standard error correction is used when estimating wage and non-wage compensation equations, with special attention given to FDI’s effect by worker educational attainment and union status. Wage findings reveal that FDI activity is associated with a wage premium for highly educated non-union workers and with union rent erosion for all educational-gender groups excluding females with low educational attainment. Non-wage compensation analysis reveals FDI activity is generally associated with significantly higher probabilities of workers receiving employer financed non-wage compensation for union and non-union workers regardless of their level of educational attainment.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26416.

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Date of creation: Dec 2009
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Handle: RePEc:pra:mprapa:26416

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Keywords: FDI; labor; educational attainment; compensation; wage; non-manufacturing; union; healthcare; pension;

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  1. Almeida, Rita, 2007. "The labor market effects of foreign owned firms," Journal of International Economics, Elsevier, Elsevier, vol. 72(1), pages 75-96, May.
  2. Aitken, B. & Harrison, A. & Lipsey, R.E., 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States," Papers, Columbia - Graduate School of Business 95-21, Columbia - Graduate School of Business.
  3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
  4. Lipsey, Robert E. & Sjoholm, Fredrik, 2004. "Foreign direct investment, education and wages in Indonesian manufacturing," Journal of Development Economics, Elsevier, Elsevier, vol. 73(1), pages 415-422, February.
  5. Dunning, John H & Buckley, Peter J, 1977. "International Production and Alternative Models of Trade," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 45(4), pages 392-403, December.
  6. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 117(1), pages 30-64, March.
  7. Robert E. Lipsey, 1994. "Foreign-Owned Firms and U.S. Wages," NBER Working Papers 4927, National Bureau of Economic Research, Inc.
  8. Saif S. Alhakimi & James Peoples, 2009. "Foreign Direct Investment And Domestic Wages In The Usa," Manchester School, University of Manchester, vol. 77(1), pages 47-64, 01.
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