FOREIGN DIRECT INVESTMENT AND DOMESTIC WAGES IN THE USA

Saif S. Alhakimi and James Peoples

Manchester School, 2009, vol. 77, issue 1, pages 47-64

Abstract: High wages generally prevail in industries with substantial foreign direct investment (FDI) in developed countries. This study examines whether such wages are economically justified by revealing the effect of worker and industry characteristics on the FDI-domestic wage relationship. Findings show that while observed worker characteristics that command high wages help explain high FDI wages, the propensity for foreign owners to invest in capital-intensive industries contributes appreciably to the high wage paid to workers in industries with high levels of FDI. Copyright © 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd and The University of Manchester.

Date: 2009

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