Foreign Direct Investment and Income Inequality: Human Capital Matters

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Title:	Foreign Direct Investment and Income Inequality: Human Capital Matters
Authors:	Lin, Shu-Chin;Kim, Dong-Hyeon;Wu, Yi-Chen
Date:	2013-11-18
Issue Date:	2016-01-06 10:55:39 (UTC+8)
Abstract:	This paper empirically examines whether human capital defines the association between foreign direct investment (FDI) and income inequality. Rather than focusing on one country or region, we investigate with a broad cross section of countries to address parameter heterogeneity across countries. Using the instrumental variable threshold regressions approach, we find a significant threshold level of human capital, below which FDI exerts a disproportionately positive (negative) impact on the relatively poor (rich) and hence improves income distribution. Beyond this critical level, however, FDI benefits (harms) the nonpoor (nonrich) most and thus exacerbates income inequality.
Relation:	Journal of Regional science 53(5), pp.874-896
DOI:	10.1111/jors.12077
Appears in Collections:	[Graduate Institute & Department of Economics] Journal Article

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