Foreign Investment and Wages: A Crowding-Out Effect in Mexico

Vidal, Enrique Leonardo Kato

doi:10.7764/laje.50.2.209

Cited by 5 publications

(2 citation statements)

References 19 publications

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“…By the same token, Sharma and Cardenas (2018) show that FDI had a positive correlation with regional average hourly wages in Mexico (between 2005 and 2015). Conversely, Waldkirch (2010) discovered either negative or no effect of FDI on average wages in Mexican industrial sectors during the period 1994–2004, while Kato‐Vidal (2013) reports a negative effect of FDI on overall wages across Mexican regions between 1993 and 2010. Based on the theoretical literature and existing evidence, we formulate the following testable hypothesis.H1 FDI and average wages .…”

Section: Fdi and Wage Inequality: Theory And Evidencementioning

confidence: 99%

FDI and the growing wage gap in Mexican municipalities

Ibarra-Olivo

Rodríguez‐Pose

2022

Papers in Regional Science

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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.

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Section: Fdi and Wage Inequality: Theory And Evidencementioning

confidence: 99%

FDI and the growing wage gap in Mexican municipalities

Ibarra-Olivo

Rodríguez‐Pose

2022

Papers in Regional Science

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“…Some argue that FDI does not have a general positive effect on wages but instead creates a higher positive impact on skilled wages than on nonskilled wages, and thus, generates a difference between these two types of wages. For the Mexican economy, in particular, Feenstra and Hanson () documented rising wage differentials in maquiladoras; Chiquiar () examined the changes in regional wage differentials in the 1990s; and Kato‐Vidal () searched for crowding‐out effects of foreign investment on wages. In a study of more than 100 developing and developed countries, Figini () discovered that the effect of FDI on wages differs between countries depending on each country's level of development.…”

Section: Introductionmentioning

confidence: 99%

Foreign Direct Investment in Mexico, Crime, and Economic Forces

Cabral

Mollick

Saucedo

2018

Contemporary Economic Policy

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This paper re‐examines inflows of foreign direct investment (FDI) in the 32 subnational Mexican states based on quarterly data from 2005 to 2015, which includes rising drug‐related crimes. We estimate our models using panel data methods by type of crime, state‐level indicators (real wages and electricity consumption), macroeconomic forces (the real exchange rate and interest rate), and a dummy variable for the financial crisis of 2008–2009. We employ a flexible lag‐length method and find that homicides and thefts have negative and statistically significant effects on FDI, while other crimes have no effects. Subsample work suggests higher negative effects in the most violent states. (JEL F15, F21, F23, F36)

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Impacto de IED en la productividad y salarios en México

2020

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Este artículo analiza el impacto de algunas variables de interés sobre la Inversión Extranjera Directa —IED— en el sector manufacturero mexicano para el periodo 2007-2018. Se busca mostrar el impacto de IED recibida en este sector sobre la productividad medida en las horas trabajadas en la industria manufacturera y por la capacidad de planta, las remuneraciones pagadas al personal ocupado en establecimientos manufactureros, los salarios al personal obrero y técnico, los salarios pagados al personal administrativo y el número de personal ocupado. Se desarrollaron cuatro modelos aplicando el método de Mínimos Cuadrados Ordinarios, los primeros dos estimando seis variables, uno de ellos aplicando logaritmos; los otros dos modelos contemplando solamente las variables significativas de cada uno de ellos con el fin de simplificar el modelo. El modelo inicial aplicando logaritmos resultó más robusto. Los hallazgos confirman una relación positiva de la productividad del sector manufacturero, el número de personal ocupado y los salarios de obreros y técnicos sobre la IED.

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Foreign Investment and Wages: A Crowding-Out Effect in Mexico

Cited by 5 publications

References 19 publications

FDI and the growing wage gap in Mexican municipalities

FDI and the growing wage gap in Mexican municipalities

Foreign Direct Investment in Mexico, Crime, and Economic Forces

Impacto de IED en la productividad y salarios en México

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