IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v47y2024i12p4487-4515.html
   My bibliography  Save this article

The effects of foreign direct investment on human capital accumulation—Evidence from China

Author

Listed:
  • Yan Liu

Abstract

This paper examines the effect of foreign direct investment (FDI) on human capital accumulation in China. The identification strategy exploits variations in FDI inflows across manufacturing sub‐sectors caused by China's FDI liberalisation and initial sectoral composition patterns across cities. Using a panel of city‐level data from 1990 to 2005, the paper shows that FDI liberalisation accelerated human capital accumulation. Cities with higher exposure to FDI liberalisation experienced higher growth in high school and college enrollment. FDI incentivizes individuals' investment in their human capital by paying a higher wage premium for skilled workers, pushing up the skill premium in the local labor market, and raising household income. Compared to export‐oriented FDI and FDI in less‐skilled industries, market‐seeking FDI and skill‐intensive FDI have a much larger effect on college enrollment.

Suggested Citation

  • Yan Liu, 2024. "The effects of foreign direct investment on human capital accumulation—Evidence from China," The World Economy, Wiley Blackwell, vol. 47(12), pages 4487-4515, December.
    • Handle: RePEc:bla:worlde:v:47:y:2024:i:12:p:4487-4515
    DOI: 10.1111/twec.13633
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/twec.13633
    Download Restriction: no
    File URL: https://libkey.io/10.1111/twec.13633?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:47:y:2024:i:12:p:4487-4515. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.