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Foreign Direct Investment, Wage Inequality, and Skilled Labor Demand in EU Accession Countries

  • Giovanni S.F. Bruno

    (Università Bocconi,Istituto di Economia Politica)

  • Rosario Crinò

    (Università di Bergamo, Dipartimento di Scienze Economiche)

  • Anna M. Falzoni

    (CESPRI, Università Bocconi)

During the 1990s Poland, Hungary and the Czech Republic have experienced rapid in-creases in wage inequality between skilled and unskilled workers and received the largest FDI inflow in Central and Eastern Europe. Using non-parametric and parametric approaches, this paper analyzes whether FDI has contributed to the raise in earning inequality and to the change in the skill composition of labor demand in the three countries. Our results suggest that, although FDI has not worsened wage inequality by favoring labor demand shifts, it has contributed to raising the skill-premium through the active role played by multinational firms in the transition-induced restructuring process which has resulted in a less compressed wage structure.

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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 154.

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Length: 38 pages
Date of creation: Feb 2004
Date of revision: Feb 2004
Handle: RePEc:cri:cespri:wp154
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  1. Bruce A. Blonigen & Matthew J. Slaughter, 2001. "Foreign-Affiliate Activity And U.S. Skill Upgrading," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 362-376, May.
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