FDI, wage inequality and employment in emerging economies: recent evidence from Indian manufacturing
AbstractThe increased integration of developing countries with the global economy has seen a remarkable increase in foreign capital over the years. While the increasing momentum of FDI capital in the manufacturing of the emerging economies has left several questions unanswered, we focus our discussion on the trends in employment and wage inequality in context of developing economies. The empirical evidence in this regard is drawn from the Indian manufacturing by using the recent firm level panel data. It draws attention to the determinants of wage rate and employment in Indian manufacturing vis-à-vis the foreign and the domestic affiliates during the period 2001-02 to 2007-08. While empirical evidence in regard to developing countries provides a mixture of results, our analysis broadly concludes that for the entire manufacturing and the domestic affiliates, capital intensity was the most dominant factor in determining the wage rate. On the other hand the high output per worker and foreign ownership played the most prominent role in determining the wage rate of the foreign affiliates during our study period. Similarly, it is observed that the employment performance of the firm is less in high capital intensive firms, whereas the size and the rate of profit of the entire manufacturing and its subgroups are observed positive and significant in determining the employment.
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 University Library of Munich, Germany in its series MPRA Paper with number 35149.
Date of creation: 21 Jul 2010
Date of revision:
; Employment; Wage; Panel data; Domestic Affiliates; Foreign Affiliates;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
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.:
- Haskel, J.E. & Pereira, S. & Slaughter, M., 2007.
"Does inward foreign direct investment boost the productivity of domestic firms?,"
Open Access publications from University College London
http://discovery.ucl.ac.u, University College London.
- Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2007. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 482-496, August.
- Haskel, Jonathan & Pereira, Sonia & Slaughter, Matthew, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," CEPR Discussion Papers 3384, C.E.P.R. Discussion Papers.
- Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," NBER Working Papers 8724, National Bureau of Economic Research, Inc.
- Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," Working Papers 452, Queen Mary, University of London, School of Economics and Finance.
- Caves, Richard E, 1974. "Multinational Firms, Competition, and Productivity in Host-Country Markets," Economica, London School of Economics and Political Science, vol. 41(162), pages 176-93, May.
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
- Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May.
- Smarzynska, Beata K., 2002.
"Does foreign direct investment increase the productivity of domestic firms : in search of spillovers through backward linkages,"
Policy Research Working Paper Series
2923, The World Bank.
- Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
- Beata K. Smarzynska, 2003. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages," William Davidson Institute Working Papers Series 548, William Davidson Institute at the University of Michigan.
- Stephen Machin & John Van Reenen, 1998.
"Technology and changes in skill structure: evidence from seven OECD countries,"
IFS Working Papers
W98/04, Institute for Fiscal Studies.
- Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1215-1244, November.
- Machin, S. & Van Reenen, J., 1997. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," Papers 24, Centre for Economic Performance & Institute of Economics.
- Machin, S & Van Reenen, J, 1998. "Technology and changes in skill structure: Evidence from seven OECD countries," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Robert E. Lipsey & Fredrik Sjoholm, 2001. "Foreign Direct Investment and Wages in Indonesian Manufacturing," NBER Working Papers 8299, National Bureau of Economic Research, Inc.
- Steven Globerman & John C. Ries & Ilan Vertinsky, 1994. "The Economic Performance of Foreign Affiliates in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 143-56, February.
- Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
- Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
- Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
- M. Ramirez, 2000. "Foreign Direct Investment in Mexico: A Cointegration Analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 37(1), pages 138-162.
- Rashmi Banga, 2007. "Liberalisation and Wage Inequality In India," Working Papers id:805, eSocialSciences.
- Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
- Almeida, Rita K., 2003. "The Effects of Foreign Owned Firms on the Labor Market," IZA Discussion Papers 785, Institute for the Study of Labor (IZA).
- Lensink, R. & Morrissey, O., 2001. "Foreign direct investment: flows, volatility and growth in developing countries," Research Report 01E16, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
- Glass, Amy Jocelyn & Saggi, Kamal, 2002.
" Multinational Firms and Technology Transfer,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 104(4), pages 495-513, December.
- Rashmi Banga, 2007. "Impact of Liberalisation on Wages and Employment in Indian Manufacturing Industries," Working Papers id:989, eSocialSciences.
- Blomstrom, Magnus & Persson, Hakan, 1983. "Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry," World Development, Elsevier, vol. 11(6), pages 493-501, June.
- Das, Satya P., 2001. "Trade and relative wages: The role of supervisory function by skilled workers," European Economic Review, Elsevier, vol. 45(1), pages 45-65, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.