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The Role of Multinational Firms in the Wage‐Gap Debate
Author(s) -
Markusen James R.,
Venables Anthony J.
Publication year - 1997
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00068
Subject(s) - multinational corporation , economics , wage , labour economics , investment (military) , liberalization , phenomenon , work (physics) , foreign direct investment , market economy , macroeconomics , politics , political science , law , engineering , mechanical engineering , physics , finance , quantum mechanics
The observation of an increase in the ratio of skilled to unskilled wages in the high‐income countries and in some cases in low/middle‐income countries has led to considerable discussion and controversy as to its cause. Virtually none of the analyses have considered a role for multinational investment in explaining the wage‐gap phenomenon. This paper adapts the authors’ earlier work to consider what role multinationals might play in factor markets. It identifies circumstances under which investment liberalization is likely to raise the wage gap in both the skilled‐labor abundant and the unskilled‐labor abundant country.