Foreign capital inflows resulted in overall economic growth in many countries, but there are many concerns about its distributive effects,especially on fluctuating wages, which are still being investigated. The aim of this research is to investigate the impact of foreign direct investment on domestic industry wages using micro-level data from Pakistan from 1996-97 to 2007-08. Foreign firms are expected to pay higher wages than that domestic firms in order to attract more labor; thus, if foreign and domestic firms compete in the same labor market, domestic firms would pay higher wages to recruit jobs, resulting in rising average domestic industry wages. The empirical analysis also shows that in Pakistan, FDI inflows raise industry wage premiums.The findings of the study are robust by the inclusion of various globalization and sector-related variables. To reap higher wages, Pakistan's government should promote FDI at the industry level.
Keywords : Foreign Direct Investment; Wage Premium; Manufacturing Sector; Pakistan
Authored by :
(1) Qamer un-Nisa
Ph.D. Scholar, Institute of Agriculture and Resource Economics, University of Agriculture, Faisalabad, Punjab, Pakistan.
(2) Jabbar Ul-Haq
Assistant Professor, Department of Economics, University of Sargodha, Sargodha, Punjab, Pakistan.
(3) Nazia Nazeer
Assistant Professor, National University of Computer and Emerging Sciences, Karachi, Sindh, Pakistan.
Global Social Science Review (GSSR) is published by Humanity Publications, a leading publishing house in Pakistan in research and analytics, that assists researchers in advancing research outcomes for societal benefit. GSSR intends to promote qualitative and quantitative researches and findings with the help of newly emerging tools and patterns utilized in experiments, observations, interviews, analysis and surveys by encircling all major segments of Social Sciences and Multi-disciplinary academic and research disciplines. GSSR is a multi-disciplinary, quarterly, double-blind peer-reviewed research journal that encompasses major disciplines of social science, i.e. Government & Politics, Human & Society, Historical & Regional Studies and Education & Mass Studies in general, with a specific interest in the sub-disciplines
