FDI and the labor share in developing countries: A theory and some evidence

Bruno Decreuse and Paul Maarek

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Abstract: We address the effects of FDI on the labor share in developing countries. Our theory relies on the impacts of FDI on wage and labor productivity in a frictional labor market. FDI has two opposite effects on the labor share: a negative force originated by technological advance, and a positive force due to increased labor market competition between …firms. We test this theory on aggregate panel data through …fixed effects and IV estimates. We examine the relationship between the labor share in the manufacturing sector and the ratio of FDI stock to GDP. We show that FDI has decreased the labor share in the host countries of our dataset. This impact amounts to between 10% to 20% of the mean labor share in our sample.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2015-12
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Citations: View citations in EconPapers (23)

Published in Annals of Economics and Statistics, 2015, Special issue on health and labour economics (119-120), pp.289--319. ⟨10.15609/annaeconstat2009.119-120.289⟩

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Related works:
Journal Article: FDI and the Labor Share in Developing Countries: A Theory and Some Evidence (2015)
Working Paper: FDI and the labor share in developing countries: A theory and some evidence (2013)
Working Paper: FDI and the labor share in developing countries: A theory andsome evidence (2008)
Working Paper: FDI and the labor share in developing countries: a theory and some evidence (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01456114

DOI: 10.15609/annaeconstat2009.119-120.289

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