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Foreign Direct Investment And Host Country Wages: New Evidence From Irish Plant Level Panel Data

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  • Frances Ruane
  • Ali Ugur

Abstract

This paper examines how foreign plants may impact on the averages wages paid by domestic plants within a host economy. The analysis, building on Aitken, Harrison and Lipsey (1996), is based on plant level panel data for the Irish manufacturing industry during the 1990s. We find that respective wages for both skilled and unskilled workers are relatively higher in foreign firms within the same sector, even after controlling for plant-level effects. Our analysis also shows that differences between domestic plants’ average wages across sectors are positively and significantly related to differences in foreign presence across sectors. However, this relationship disappears once sector and plant characteristics are taken into account.

Suggested Citation

  • Frances Ruane & Ali Ugur, 2005. "Foreign Direct Investment And Host Country Wages: New Evidence From Irish Plant Level Panel Data," The Institute for International Integration Studies Discussion Paper Series iiisdp029, IIIS.
    • Handle: RePEc:iis:dispap:iiisdp029
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    References listed on IDEAS

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    1. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
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    1. Nguyen-Huu, Thanh Tam & Nguyen-Khac, Minh, 2017. "Impacts of Export-platform FDI on the production of upstream industries - do third country size, trade agreements and local content requirement matter? Evidence from the Vietnamese supporting industri," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 11, pages 1-33.
    2. David Bailey & Helena Lenihan, 2015. "A Critical Reflection on Irish Industrial Policy: A Strategic Choice Approach," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(1), pages 47-71, February.
    3. David Bailey & Helena Lenihan & Ajit Singh, 2009. "Lessons for African Economies from Irish and East Asian Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 9(4), pages 357-382, December.
    4. David Bailey & Helena Lenihan & Ajit Singh, 2008. "Tiger, Tiger, Burning Bright? Industrial Policy Lessons from Ireland and East Asia for Small African Economies," Working Papers wp374, Centre for Business Research, University of Cambridge.
    5. Anguelov Nikolay, 2014. "Does the Presence of Multinational Corporations Affect a Country’s Gross Domestic Product?," Global Economy Journal, De Gruyter, vol. 14(1), pages 11-30, June.
    6. Nguyen-Huu, Thanh Tam & Nguyen-Khac, Minh, 2017. "Impacts of export-platform FDI on backward linkages - Do third country size, trade agreements and heterogeneity of firms matter? Evidence from the Vietnamese supporting industries," Economics Discussion Papers 2017-21, Kiel Institute for the World Economy (IfW Kiel).

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