Is More Mobility Good? Firm Mobility and the Low Wage-Low Productivity Trap

International Trade from University Library of Munich, Germany

Abstract: This paper explores the possibility that unregulated FDI flows are causally implicated in the decline in labor productivity growth in semi- industrialized economies. These effects are hypothesized to operate through the negative impact of firm mobility on worker bargaining power and thus affecting wages. Downward pressure on wages can reduce the pressure on firms to raise productivity in defense of profits, contributing to a low wage–low productivity trap. This paper presents empirical evidence, based on panel data fixed effects and GMM estimation for 37 semi-industrialized economies, that supports the causal link between increased firm mobility and lower wages, as well as slower productivity growth over the period 1970–2000.

Keywords: Foreign direct investment; productivity; capital mobility. (search for similar items in EconPapers)
JEL-codes: F16 F2 O3 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2005-05-10
New Economics Papers: this item is included in nep-lab
Note: Type of Document - pdf; pages: 41
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Is more mobility good?: Firm mobility and the low wage-low productivity trap (2007)
Working Paper: Is More Mobility Good? Firm Mobility and the Low Wage -- Low Productivity Trap (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpit:0505008

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