A panel data analysis of FDI and informal labor markets

Antonio Baez-Morales ()

No 201402, AQR Working Papers from University of Barcelona, Regional Quantitative Analysis Group

Abstract: The objective of this paper is to examine whether informal labor markets affect the flows of Foreign Direct Investment (FDI), and also whether this effect is similar in developed and developing countries. With this aim, different public data sources, such as the World Bank (WB), and the United Nations Conference on Trade and Development (UNCTAD) are used, and panel econometric models are estimated for a sample of 65 countries over a 14 year period (1996-2009). In addition, this paper uses a dynamic model as an extension of the analysis to establish whether such an effect exists and what its indicators and significance may be. While the results shows that informal labor markets are significant and do positively affect the flow of FDI, these effects are felt up to a certain level of informality, above which the effect becomes negative. The results are similar for developed and developing countries and are robust to several checks.

Keywords: Foreign Direct Investment; Informal labor markets; Institutions. JEL classification: F16; F23; J8; M5 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2014-02, Revised 2014-02
New Economics Papers: this item is included in nep-cse, nep-int, nep-iue and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: A panel data analysis of FDI and informal labor markets (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:aqr:wpaper:201402

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