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Foreign Direct Investment And Domestic Wages In The Usa

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  • SAIF S. ALHAKIMI
  • JAMES PEOPLES

Abstract

High wages generally prevail in industries with substantial foreign direct investment (FDI) in developed countries. This study examines whether such wages are economically justified by revealing the effect of worker and industry characteristics on the FDI-domestic wage relationship. Findings show that while observed worker characteristics that command high wages help explain high FDI wages, the propensity for foreign owners to invest in capital-intensive industries contributes appreciably to the high wage paid to workers in industries with high levels of FDI. Copyright © 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd and The University of Manchester.

Suggested Citation

  • 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, January.
  • Handle: RePEc:bla:manchs:v:77:y:2009:i:1:p:47-64
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    References listed on IDEAS

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    1. Aitken, Brian & Harrison, Ann & Lipsey, Robert E., 1996. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," Journal of International Economics, Elsevier, vol. 40(3-4), pages 345-371, May.
    2. Zadia Feliciano & Robert E. Lipsey, 1999. "Foreign Ownership and Wages in the United States, 1987 - 1992," NBER Working Papers 6923, National Bureau of Economic Research, Inc.
    3. Zhao, Laixun, 1998. "The Impact of Foreign Direct Investment on Wages and Employment," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 284-301, April.
    4. Driffield, Nigel & Taylor, Karl, 2000. "FDI and the Labour Market: A Review of the Evidence and Policy Implications," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 90-103, Autumn.
    5. 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 143-156, February.
    6. Conyon, Martin J, et al, 2002. "The Productivity and Wage Effects of Foreign Acquisition in the United Kingdom," Journal of Industrial Economics, Wiley Blackwell, vol. 50(1), pages 85-102, March.
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    Cited by:

    1. Özlem Eren & James Peoples, 2013. "FDI activity and worker compensation: evidence from US non-manufacturing industries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(3), pages 319-338, July.
    2. Masahiro Endoh, 2012. "Return Differentials of Foreign Investment among OECD Countries," Keio/Kyoto Joint Global COE Discussion Paper Series 2012-016, Keio/Kyoto Joint Global COE Program.
    3. Underwood, Robert L., 2012. "Automotive foreign direct investment in the United States: Economic and market consequences of globalization," Business Horizons, Elsevier, vol. 55(5), pages 463-474.

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