Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States

Brian Aitken, Ann Harrison and Robert Lipsey

Chapter 4 in Globalization, Firms, and Workers, 2022, pp 61-87 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This paper explores the relationship between wages and foreign investment in Mexico, Venezuela, and the United States. Despite very different economic conditions and levels of development, we find one fact that is robust across all three countries: higher levels of foreign investment are associated with higher wages. However, in Mexico and Venezuela, foreign investment is associated with higher wages only for foreign-owned firms - there is no evidence of wage spillovers leading to higher wages for domestic firms. The lack of spillovers in Mexico and Venezuela is consistent with significant wage differentials between foreign and domestic enterprises. In the United States, where the evidence suggests some wage spillovers from foreign to domestic enterprises, wage differentials are smaller.

Keywords: Globalization; Trade Reform; Foreign Direct Investment; Labour Markets; Employment; Wages; Offshoring; Innovation; Credit Constraints; Industrial Policy; Labour Rights Activism (search for similar items in EconPapers)
JEL-codes: F02 F6 F63 (search for similar items in EconPapers)
Date: 2022
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Related works:
Journal Article: Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States (1996)
Working Paper: Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States (1995)
Working Paper: Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela and the United States (1995)
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