Date of this Version
Journal of International Economics
This paper explores the relationship between wages and foreign investment in Mexico, Venezuela, and the United States. Despite very different economic conditions and levels of development, we find one fact that is robust across all three countries: higher levels of foreign investment are associated with higher wages. However, in Mexico and Venezuela, foreign investment is associated with higher wages only for foreign-owned firms — there is no evidence of wage spillovers leading to higher wages for domestic firms. The lack of spillovers in Mexico and Venezuela is consistent with significant wage differentials between foreign and domestic enterprises. In the United States, where the evidence suggests some wage spillovers from foreign to domestic enterprises, wage differentials are smaller.
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Aitken, B. J., Harrison, A. E., & Lipsey, R. E. (1996). Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States. Journal of International Economics, 40 (3-4), 345-371. http://dx.doi.org/10.1016/0022-1996(95)01410-1
Business Administration, Management, and Operations Commons, International Business Commons
Date Posted: 27 November 2017
This document has been peer reviewed.