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Title:FDI and the labor share in developing countries: A theory and some evidence PDF Logo
Authors:Maarek, Paul
Decreuse, Bruno
Issue Date:2011
Series/Report no.:Proceedings of the German Development Economics Conference, Berlin 2011 54
Abstract: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.
Subjects:FDI
Matching frictions
Firm heterogeneity
Technological advance
JEL:E25
F16
F21
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2011 (Berlin)

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