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Do Multinational Enterprises Push up the Wages of Domestic Firms in the Italian Manufacturing Sector?
Author(s) -
Pittiglio Rosanna,
Reganati Filippo,
Sica Edgardo
Publication year - 2015
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12076
Subject(s) - multinational corporation , foreign direct investment , upstream (networking) , wage , manufacturing sector , business , labour economics , investment (military) , manufacturing , linkage (software) , downstream (manufacturing) , economics , international economics , international trade , finance , macroeconomics , computer network , biochemistry , chemistry , marketing , politics , computer science , political science , gene , law
This paper investigates the impact of incoming foreign direct investment on local wages in the Italian manufacturing sector. We find that wage spillovers take place mainly when the technological gap between domestically owned firms and foreign‐owned firms is large. Specifically, a large technological distance between domestically owned and foreign‐owned firms has positive effects on wages paid by domestically owned firms in the same industry and negative on domestic wages in upstream and/or in downstream industries. Finally, inward investment may indeed improve the domestic sectors, although such linkage depends on different characteristics of domestically owned firms and sectors where firms operate.