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Title:FDI and income inequality: evidence from a panel of US states PDF Logo
Authors:Chintrakarn, Pandej
Herzer, Dierk
Nunnenkamp, Peter
Issue Date:2010
Series/Report no.:Kiel working paper 1579
Abstract:This study employs state-level panel data to explore the relationship between inward foreign direct investment (FDI) and income inequality in the United States. Using panel cointegration techniques that allow for cross-sectional heterogeneity, cross-sectional dependence, and endogenous regressors, we find that the short-run effects of FDI on income inequality are insignificant or weakly significant and negative. In the long run, however, FDI exerts a significant and robust negative effect on income inequality in the United States. This result for the United States as a whole does not imply that FDI narrows income gaps in the long run in each individual state. There is considerable heterogeneity in the long-run effects of FDI on income inequality across states, with some states (21 out of 48 cases) exhibiting a positive relationship between FDI in income inequality.
Subjects:FDI
Inequality
Panel Cointegration
United States
JEL:F21
D31
C23
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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