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Urban Studies, Vol. 43, No. 9, 1439-1450 (2006)
DOI: 10.1080/00420980600831627
© 2006 Urban Studies Journal Limited

The Effect of Foreign Direct Investment on the Urban Wage in China: An Empirical Examination

Ying Ge

School of International Trade and Economics, University of International Business and Economics, Huixindongjie, Hepingjie Beikou, Chaoyang District, Beijing, P.R. China, 100029. yige60{at}vip.sina.com

How does foreign direct investment (FDI) affect the wage levels of cities in a host country? This paper uses a panel dataset of Chinese cities to examine the impact of inward FDI on the urban real wage. The results suggest that the existence of FDI has a significant and positive effect on urban real wages and that this impact remains significant after controlling for other city characteristics. Cross-city variation of FDI intensity is one important factor contributing to intercity wage inequality.


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