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The Labor Market Effects of FDI: A Panel Data Evidence from Mexico

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  • Amarendra Sharma
  • Oscar Cardenas

Abstract

This paper explores the effects of Foreign Direct Investment (FDI) inflows on six labor market outcomes by using a panel data of the Mexican states from 2005 to 2015. By relying on the system Generalized Method of Moments estimator to address potential endogeneity of FDI in the labor market outcomes regressions, this study finds that the FDI inflows result in a reduction in the overall unemployment rate. Moreover, the FDI is associated with a decrease in the percentage of employed people with the need and availability to offer more working hours and an increase in the median hourly wage rate. The FDI is not likely to influence the critical employment, informal sector employment, and unemployment duration.

Suggested Citation

  • Amarendra Sharma & Oscar Cardenas, 2018. "The Labor Market Effects of FDI: A Panel Data Evidence from Mexico," International Economic Journal, Taylor & Francis Journals, vol. 32(4), pages 572-588, October.
    • Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:572-588
    DOI: 10.1080/10168737.2018.1547322
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    Cited by:

    1. J. Eduardo Ibarra‐Olivo & Andrés Rodríguez‐Pose, 2022. "FDI and the growing wage gap in Mexican municipalities," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1411-1439, December.
    2. Chupryhin, Radzivon, 2021. "Determinants of Foreign Direct Investment in Europe: Bayesian Model Averaging in the Presence of Weak Exogeneity," MPRA Paper 107197, University Library of Munich, Germany.

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