IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v61y2024ics1544612323012990.html
   My bibliography  Save this article

Minimum wage and corporate OFDI

Author

Listed:
  • Xie, Qin
  • Li, Shuo

Abstract

Corporate OFDI can help firms fully utilize opportunities and resources on a global scale, enhancing their global competitiveness. However, the findings of this paper indicate that the minimum wage standards in the regions where firms are located can lead to a crowding-out effect on the level of outward foreign direct investment by causing wage levels to be above the market equilibrium wage level. Furthermore, this impact is more pronounced in non-state-owned enterprises and in firms located in regions with lower levels of marketization.

Suggested Citation

  • Xie, Qin & Li, Shuo, 2024. "Minimum wage and corporate OFDI," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612323012990
    DOI: 10.1016/j.frl.2023.104927
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323012990
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104927?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wang, Maolin & Lin, Huiting & Huang, Yehua & Lu, Huiyan, 2023. "Poverty alleviation and firm productivity: Evidence from China's minimum wage system," International Review of Financial Analysis, Elsevier, vol. 87(C).
    2. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    3. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
    4. di Giovanni, Julian, 2005. "What drives capital flows? The case of cross-border M&A activity and financial deepening," Journal of International Economics, Elsevier, vol. 65(1), pages 127-149, January.
    5. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2019. "The Effect of Minimum Wages on Low-Wage Jobs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1405-1454.
    6. John H. Dunning, 1977. "Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach," Palgrave Macmillan Books, in: Bertil Ohlin & Per-Ove Hesselborn & Per Magnus Wijkman (ed.), The International Allocation of Economic Activity, chapter 12, pages 395-418, Palgrave Macmillan.
    7. Agenor, Pierre-Richard & Aizenman, Joshua, 1999. "Macroeconomic adjustment with segmented labor markets," Journal of Development Economics, Elsevier, vol. 58(2), pages 277-296, April.
    8. Dai, Yixin & Zhang, Ruijia & Hu, Hanqing & Hou, Keqiang, 2022. "Is there “productivity paradox” in Chinese producer-service enterprises' OFDI?," International Review of Financial Analysis, Elsevier, vol. 84(C).
    9. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
    10. Russ, Katheryn Niles, 2007. "The endogeneity of the exchange rate as a determinant of FDI: A model of entry and multinational firms," Journal of International Economics, Elsevier, vol. 71(2), pages 344-372, April.
    11. Liu, Shanmin & Zhuo, Yangyuan & Shen, Xinyue & Cai, Mengda & Yang, Ye, 2023. "The impact of declined social insurance contribution rate on enterprise total factor productivity: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    12. Yeaple, Stephen Ross, 2009. "Firm heterogeneity and the structure of U.S. multinational activity," Journal of International Economics, Elsevier, vol. 78(2), pages 206-215, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fan, Haichao & Lin, Faqin & Tang, Lixin, 2018. "Minimum Wage and Outward FDI from China," Journal of Development Economics, Elsevier, vol. 135(C), pages 1-19.
    2. Ding, Haoyuan & Fan, Haichao & Jin, Yuying & Qi, Tong, 2022. "Talented overseas returnees and outward foreign direct investment," European Economic Review, Elsevier, vol. 148(C).
    3. Ding, Haoyuan & Ni, Bei & Xue, Chang & Zhang, Xiaoyu, 2022. "Land holdings and outward foreign direct investment: Evidence from China," Journal of International Money and Finance, Elsevier, vol. 124(C).
    4. Elhanan Helpman, 2014. "Foreign Trade and Investment: Firm-level Perspectives," Economica, London School of Economics and Political Science, vol. 81(321), pages 1-14, January.
    5. Onur A. Koska & Ngo Van Long & Frank Stähler, 2018. "Foreign direct investment as a signal," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 60-83, February.
    6. Joakim Gullstrand & Karin Olofsdotter & Susanna Thede, 2016. "Importers, Exporters and Multinationals: Exploring the Hierarchy of International Linkages," Open Economies Review, Springer, vol. 27(3), pages 495-514, July.
    7. Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.
    8. Buch, Claudia M. & Koch, Cathérine Tahmee & Koetter, Michael, 2009. "Margins of international banking: is there a productivity pecking order in banking, too?," Discussion Paper Series 2: Banking and Financial Studies 2009,12, Deutsche Bundesbank.
    9. Andre Jungmittag, 2019. "Service trade restrictiveness and internationalisation of retail trade," International Economics and Economic Policy, Springer, vol. 16(2), pages 293-333, April.
    10. Hejazi, Walid & Tang, Jianmin & Wang, Weimin, 2023. "Absorptive capacity, learning and profiting from outward FDI: Evidence from Canadian firms," Journal of World Business, Elsevier, vol. 58(3).
    11. Anna Gumpert & James R. Hines, Jr. & Monika Schnitzer, 2011. "The Use of Tax Havens in Exemption Regimes," NBER Working Papers 17644, National Bureau of Economic Research, Inc.
    12. J. Bradford Jensen & Dennis P. Quinn & Stephen Weymouth, 2014. "The Influences Of Foreign Direct Investments, Intrafirm Trading, And Currency Undervaluation On U.S. Firm Trade Disputes," Working Papers 14-04, Center for Economic Studies, U.S. Census Bureau.
    13. Alguacil, Maite & Martí, Josep & Orts, Vicente, 2017. "Firm heterogeneity and the market scope of European multinational activity," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 645-659.
    14. Naoto Jinji & Xingyuan Zhang & Shoji Haruna, 2022. "Deep Integration, Global Firms, and Technology Spillovers," Advances in Japanese Business and Economics, Springer, number 978-981-16-5210-3, June.
    15. Michael Moritz & Veronika Hecht & Patricia Noska & Johannes Schaffler, 2020. "Types of FDI and Determinants of Affiliate Size: the Classification Makes the Difference," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 70(4), pages 312-331, October.
    16. Anca D. Cristea & Daniel X. Nguyen, 2016. "Transfer Pricing by Multinational Firms: New Evidence from Foreign Firm Ownerships," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 170-202, August.
    17. Shawn Arita & Kiyoyasu Tanaka, 2014. "Heterogeneous multinational firms and productivity gains from falling FDI barriers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 83-113, February.
    18. Tiago Loncan, 2021. "The Effects of Project Scale on FDI Location Choices: Evidence from Emerging Economies," Management International Review, Springer, vol. 61(2), pages 157-205, April.
    19. Camarero, Mariam & Montolio, Laura & Tamarit, Cecilio, 2019. "What drives German foreign direct investment? New evidence using Bayesian statistical techniques," Economic Modelling, Elsevier, vol. 83(C), pages 326-345.
    20. Buch, Claudia M. & Koch, Cathérine T. & Koetter, Michael, 2014. "Should I stay or should I go? Bank productivity and internationalization decisions," Journal of Banking & Finance, Elsevier, vol. 42(C), pages 266-282.

    More about this item

    Keywords

    Minimum wage; Corporate OFDI;

    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:eee:finlet:v:61:y:2024:i:c:s1544612323012990. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    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.