• Media type: Electronic Conference Proceeding
  • Title: FDI and the labor share in developing countries: A theory and some evidence
  • Contributor: Maarek, Paul [Author]; Decreuse, Bruno [Author]
  • Published: Kiel und Hamburg: ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft, 2011
  • Language: English
  • Keywords: Firm heterogeneity ; E25 ; F16 ; F21 ; Technological advance ; Matching frictions ; FDI
  • Origination:
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  • Description: We address the effects of FDI on the labor share in developing countries. Our theory relies on the impacts of FDI on productive heterogeneity in a frictional labor market. FDI have two opposite effects: 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 system-GMM estimations. We find a U-shaped relationship between the labor share in the manufacturing sector and the ratio of FDI stock to GDP. Most countries are stuck in the decreasing part of the curve.
  • Access State: Open Access