FDI and the growing wage gap in Mexican municipalities

Ibarra-Olivo, J. Eduardo and Rodríguez-Pose, Andrés ORCID: 0000-0002-8041-0856 (2022) FDI and the growing wage gap in Mexican municipalities. Papers in Regional Science, 101 (6). 1411 - 1439. ISSN 1056-8190

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Abstract

Inward foreign direct investment (FDI) has generally been linked to higher wages, but evidence remains sparse on the overall effects of FDI on average wages, the wage gap between skilled and unskilled labour, and inter-industry heterogeneity. We address these issues for Mexican municipalities and industries for a period of increasing FDI and sectoral change that saw growing wage inequality. By combining two non-experimental techniques we find that FDI in Mexico was associated with higher wages, mostly for skilled workers—but also for unskilled ones—and a widening gap between them. Effects vary both between and within industries depending on location, and they either wax or wane when the initial or incremental effects are considered.

Item Type:	Article
Official URL:	https://rsaiconnect.onlinelibrary.wiley.com/journa...
Additional Information:	© 2022 The Authors
Divisions:	Geography & Environment
Subjects:	G Geography. Anthropology. Recreation > G Geography (General) H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HC Economic History and Conditions
JEL classification:	F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C14 - Semiparametric and Nonparametric Methods
Date Deposited:	16 Dec 2022 14:45
Last Modified:	08 Apr 2024 05:12
URI:	http://eprints.lse.ac.uk/id/eprint/117636

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