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Sustainability 2018, 10(4), 1219; https://doi.org/10.3390/su10041219

Inward Greenfield FDI and Patterns of Job Polarization

European Commission, Joint Research Centre, 41092 Seville, Spain
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Received: 27 February 2018 / Revised: 5 April 2018 / Accepted: 8 April 2018 / Published: 17 April 2018
(This article belongs to the Special Issue The Impact of Technological Change on Employment, Skills and Earnings)
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Abstract

The unprecedented growth in foreign direct investment in the last few decades has caused drastic changes in the labor markets of the host countries. The major part of FDI takes place in low-tech industries, where the wages and skills are low, or in high-tech, where they offer a wage premium for the highly skilled workers. This mechanism may increase the polarization of employment into high-wage and low-wage jobs, at the expense of middle-skill jobs. This paper looks at the effects of two types of FDI inflows, namely foreign investment in high-skill and low-skill activities, on job polarization. We match data on greenfield FDI aggregated by country and sector with data on employment by occupational skill to investigate the extent to which different types of greenfield FDI are responsible for skill polarization. Our results show that low-skill foreign investment shifts employment from high- to medium- and low-skill jobs, while skill-intensive FDI generally leads to skill upgrading. Only FDI in information and communication technology (ICT) is associated with job polarization, but only when accounting for the plurality of job polarization patterns across European sectors. View Full-Text
Keywords: Foreign Direct Investment; Skills; European labor markets; Technological change; Globalization; Multinational enterprises Foreign Direct Investment; Skills; European labor markets; Technological change; Globalization; Multinational enterprises
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Amoroso, S.; Moncada-Paternò-Castello, P. Inward Greenfield FDI and Patterns of Job Polarization. Sustainability 2018, 10, 1219.

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