Foreign Direct Investment, Wage Inequality and Skilled Labour Demand in EU Accession Countries
Centro Studi Luca d'Agliano Development Studies Working Paper No. 188
34 Pages Posted: 16 Mar 2005
Date Written: October 2004
Abstract
During the 1990s Poland, Hungary and the Czech Republic have experienced rapid increases in wage inequality between skilled and unskilled workers and received the largest FDI inflow in Central and Eastern Europe. This paper analyzes whether FDI has contributed to the raise in earning inequality via a change in the skill composition of labor demand in the three countries. While we find that in Hungary and the Czech Republic FDI exerts a positive direct impact on the skill-premium, in none of the countries considered FDI has worsened wage inequality by favoring labor demand shifts.
Keywords: Foreign direct investment, Labour demand, Wage inequality
JEL Classification: F16, F23, J23, J31
Suggested Citation: Suggested Citation
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