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Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States

  • Aitken, Brian
  • Harrison, Ann
  • Lipsey, Robert E.

This paper explores the relationship between wages and foreign investment in Mexico, Venezuela, and the United States. Despite very different economic conditions and levels of development, we find one fact which is robust across all three countries: higher levels of foreign investment are associated with higher wages. In Mexico and Venezuela, foreign investment was associated with higher wages only for foreign-owned firms -- there is no evidence of wage spillovers leading to higher wages for domestic firms. In the United States there is evidence of wage spillovers. The lack of spillovers in Mexico and Venezuela is consistent with significant wage differentials between foreign and domestic enterprises. In the United States, wage differentials are smaller.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 40 (1996)
Issue (Month): 3-4 (May)
Pages: 345-371

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Handle: RePEc:eee:inecon:v:40:y:1996:i:3-4:p:345-371
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  1. 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.
  2. Robert E Lucas, 1999. "Making a Miracle," Levine's Working Paper Archive 2101, David K. Levine.
  3. repec:oup:qjecon:v:106:y:1991:i:2:p:557-86 is not listed on IDEAS
  4. Brian Aitken & Gordon H. Hanson & Ann E. Harrison, 1994. "Spillovers, Foreign Investment, and Export Behavior," NBER Working Papers 4967, National Bureau of Economic Research, Inc.
  5. 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.
  6. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
  7. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
  8. Robert E. Lipsey & Birgitta Swedenborg, 1981. "Foreign Takeovers of Swedish Firms," NBER Working Papers 0641, National Bureau of Economic Research, Inc.
  9. Robert E. Lipsey, 1994. "Foreign-Owned Firms and U.S. Wages," NBER Working Papers 4927, National Bureau of Economic Research, Inc.
  10. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April.
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