Foreign Direct Investment and Urban Inequality: Evidence from Chinese Cities
Anders Johansson (),
Dan Liu () and
Additional contact information
Dan Liu: Shanghai University of Finance and Economics
Maosheng Zhen: Shanghai University of Finance and Economics
No 2017-45, Stockholm School of Economics Asia Working Paper Series from Stockholm School of Economics, Stockholm China Economic Research Institute
In this paper we examine the impact of foreign direct investment (FDI) on local urban wage inequality in China. We find that the within-city college premium is larger for cities characterized by a higher degree of FDI penetration. We then try to establish the causal impact of FDI penetration on city inequality using historical Christian influence as an instrumental variable. In addition, firm-level evidence shows that FDI has amplified both between-firm inequality and within-firm inequality. FDI firms do not only hire relatively more high-skilled workers but also provide relatively higher wages to high-skilled workers compared to domestic firms. Finally, an individual-level analysis shows that FDI has a spillover effect on low-skilled workers, but the magnitude of that effect is much smaller than the effect on high-skilled workers.
Keywords: foreign direct investment; skill premium; inequality; China (search for similar items in EconPapers)
JEL-codes: F21 I30 R11 (search for similar items in EconPapers)
Pages: 42 pages
New Economics Papers: this item is included in nep-cna, nep-int, nep-lma, nep-tra and nep-ure
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hhs:hascer:2017-045
Access Statistics for this paper
More papers in Stockholm School of Economics Asia Working Paper Series from Stockholm School of Economics, Stockholm China Economic Research Institute Stockholm China Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by NanHee Lee ().