The Local Labor Market Effects of Korean Automotive Investments in the United States

Eunbi Kim

International Regional Science Review, 2021, vol. 44, issue 6, 619-646

Abstract: This study investigates the local labor market effects of automotive foreign direct investment (FDI) in Alabama in the wake of the North American Free Trade Agreement (NAFTA). Of particular interest is the effect of FDI originating from a nontraditional source country in comparison to investments by European and Japanese firms. Using 2005–2011 American Community Survey (ACS) data, we compare changes in employment rates and median weekly wages in three area types: areas with Korean FDI, areas with German and Japanese FDI and areas without FDI. Results show that Korean FDI leads to increased employment rates but decreased median weekly wages. We attribute these findings to price competitive strategies of Korean firms.

Keywords: North America Free Trade Agreement (NAFTA); economic development; foreign direct investment; automotive manufacturing; labor market; employment rates; wage differentials (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:inrsre:v:44:y:2021:i:6:p:619-646

DOI: 10.1177/0160017620964849

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