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The Effect of Foreign Direct Investment on the Urban Wage in China: An Empirical Examination

Ying Ge
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Ying Ge: School of International Trade and Economics, University of International Business and Economics, Huixindongjie, Hepingjie Beikou, Chaoyang District, Beijing, P.R. China, 100029.

Urban Studies, 2006, vol. 43, issue 9, 1439-1450

Abstract: How does foreign direct investment (FDI) affect the wage levels of cities in a host country? This paper uses a panel dataset of Chinese cities to examine the impact of inward FDI on the urban real wage. The results suggest that the existence of FDI has a significant and positive effect on urban real wages and that this impact remains significant after controlling for other city characteristics. Cross-city variation of FDI intensity is one important factor contributing to intercity wage inequality.

Date: 2006
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