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Foreign-Affiliate Activity and U.S. Skill Upgrading

In: Foreign Direct Investment

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  • Bruce A. Blonigen
  • Matthew J. Slaughter

Abstract

There has been little analysis of the impact of inward foreign direct investment (FDI) on U.S. wage inequality, even though the presence of foreign-owned affiliates in the United States has arguably grown more rapidly in significance for the U.S. economy than trade flows. Using U.S. manufacturing data from 1977 to 1994, we find that inward FDI has not contributed to U.S. within-industry skill upgrading. In fact, the 1980s wave of Japanese greenfield investments was significantly correlated with lower, not higher, relative demand for skilled labor. This casts doubt upon one possible channel of skill-biased technological change that was previously unexplored.

Suggested Citation

  • Bruce A. Blonigen & Matthew J. Slaughter, 2019. "Foreign-Affiliate Activity and U.S. Skill Upgrading," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 10, pages 325-367, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813277014_0010
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    More about this item

    Keywords

    Foreign Direct Investment; Multinational Enterprises; Mergers and Acquisitions; Greenfield; Trade Policy; Taxation; Spillovers; Offshoring; Wage Inequality; Firm-Specific Assets; Antidumping; Tariff-jumping; Industrial Organization; Ownership-Location-Internalization Theory;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F6 - International Economics - - Economic Impacts of Globalization

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