EconPapers    
Economics at your fingertips  
 

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

Bruno Decreuse and Paul Maarek

Working Papers from HAL

Abstract: This paper addresses the impact of FDI on the factor distribution of income in developing countries. We propose a theory that relies on the impacts of FDI on productive heterogeneity between firms in a frictional labor market. We argue that FDI have two opposite effects on the labor share: a negative force originated by market power and technological advance, and a positive force due to increased labor market competition between firms. Then, we test this theory on aggregate panel data through fixed effects and system-GMM estimations. We find a quantitatively meaningful U-shaped relationship between the labor share in the manufacturing sector and the ratio of FDI stock to GDP. However, most of the countries are stuck in the decreasing part of the curve,which we relate to multinationals' location choices.

Keywords: FDI; Matching frictions; Firm heterogeneity; Technological advance; IDE; Frictions d'appariement; Hétérogénéité des firmes; Avance technologique (search for similar items in EconPapers)
Date: 2008-10-23
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00333704
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://shs.hal.science/halshs-00333704/document (application/pdf)

Related works:
Journal Article: FDI and the Labor Share in Developing Countries: A Theory and Some Evidence (2015) Downloads
Working Paper: 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) Downloads
Working Paper: FDI and the labor share in developing countries: a theory and some evidence (2008) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-00333704

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2025-03-19
Handle: RePEc:hal:wpaper:halshs-00333704