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

Ali Ugur, Frances Ruane

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.
Keywords : Foreign Direct Investment, wages, Ireland


Last updated 28 August 2014 by IIIS (Email).