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FOREIGN DIRECT INVESTMENT, NON‐TRADED GOODS AND REAL WAGES
Author(s) -
Oladi Reza,
Gilbert John,
Beladi Hamid
Publication year - 2011
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2010.00512.x
Subject(s) - foreign direct investment , economics , real wages , investment (military) , labour economics , investment goods , general equilibrium theory , macroeconomics , wage , production (economics) , politics , political science , law
Using a three‐sector general equilibrium model with non‐traded goods, we investigate the impact of foreign direct investment on the real wages of skilled and unskilled workers. We show that foreign direct investment increases the real wages of skilled and unskilled workers alike, but widens the gap between the two under plausible conditions.