Wages, Overseas Investment and Ownership: Implications for Internal Labor Markets in Japan

International Journal of Human Resource Management, Volume 23, Issue 14, 2012

University of Alberta School of Business Research Paper No. 2013-604

Posted: 6 Jun 2013

See all articles by Hitoshi Hayami

Hitoshi Hayami

Keio University - Faculty of Business and Commerce

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business

Alice Orcutt Nakamura

University of Alberta - School of Business

Date Written: May 5, 2012

Abstract

Japanese firms expanded their outward foreign direct investment (FDI) rapidly in the emerging economies in Asia in the post-1990 period. The Japanese public feared that companies would increasingly rely on cheaper foreign workers and that large numbers of home country workers would find their responsibilities, and hence their earnings, dwindling over time. However, using several recent data sets on workers in firms with and without FDI investments, we show that workers received earnings premiums if they were with firms that engaged in outward FDI involving ownership of at least 50% in some foreign firm. Higher ranked workers benefited more, but even some non-managerial workers did benefit as well. These wage benefits crucially depend on the level of ownership in FDI projects. Increased foreign employment, on the other hand, did not benefit workers' wages except those in the highest ranks.

Keywords: foreign direct investment, Japan, Japanese management, Japanese wages

Suggested Citation

Hayami, Hitoshi and Nakamura, Masao and Nakamura, Alice Orcutt, Wages, Overseas Investment and Ownership: Implications for Internal Labor Markets in Japan (May 5, 2012). International Journal of Human Resource Management, Volume 23, Issue 14, 2012, University of Alberta School of Business Research Paper No. 2013-604, Available at SSRN: https://ssrn.com/abstract=2274984

Hitoshi Hayami (Contact Author)

Keio University - Faculty of Business and Commerce ( email )

2-15-45 Mita
Minato-ku
Tokyo 108-8345
Japan

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8434 (Phone)
604-822-8477 (Fax)

Alice Orcutt Nakamura

University of Alberta - School of Business ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada

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