Foreign direct investment and wage inequality: Evidence from China

Zhihong Chen, Ying Ge, Huiwen Lai

Research output: Journal article publicationJournal articleAcademic researchpeer-review

52 Citations (Scopus)

Abstract

This study provides micro-level evidence on the close link between foreign participation and wage inequality. We investigate the wage premium and the wage spillover effect of foreign-invested enterprises in the Chinese manufacturing sector. The results indicate a significant foreign premium in both wage and non-wage compensation. The presence of foreign and Hong Kong, Macao and Taiwan (HMT) investment results in a significantly negative spillover in terms the wage level in domestic firms, and discourages wage growth in such firms. Overall, the evidence suggests that exposure to foreign investment increases inter-enterprise wage inequality.
Original languageEnglish
Pages (from-to)1322-1332
Number of pages11
JournalWorld Development
Volume39
Issue number8
DOIs
Publication statusPublished - 1 Aug 2011

Keywords

  • Asian
  • China
  • Globalization
  • Inequality
  • Wage

ASJC Scopus subject areas

  • Economics and Econometrics
  • Development
  • Geography, Planning and Development
  • Sociology and Political Science

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