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Foreign direct investment and youth educational outcomes in Mexican municipalities

Ibarra-Olivo, J. E. ORCID: (2021) Foreign direct investment and youth educational outcomes in Mexican municipalities. Economics of Education Review, 82. 102123. ISSN 0272-7757

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To link to this item DOI: 10.1016/j.econedurev.2021.102123


Inward foreign direct investment (IFDI) has often been considered to play a prominent role in the development of human capital in the host economy by introducing a foreign wage premium into the labour market. However, extant evidence on IFDI labour market effects is inconclusive, especially in emerging economies. We investigate for the case of Mexico whether foreign wage premia have an effect on educational outcomes of young cohorts that were 15 years old at the time of IFDI arrival in their municipality of residence. Results suggest that increasing foreign wage premium for unskilled jobs, both in manufacturing and services, has negative effects on a cohort’s subsequent educational outcomes. The effects of foreign wage premium for skilled workers, however, are not significant but may lead to positive educational outcomes. The long-term implications of losses accruing from low investment in human capital do not only affect individuals but regions as well.

Item Type:Article
Divisions:Henley Business School > International Business and Strategy
ID Code:97578
Uncontrolled Keywords:Foreign direct investment, Foreign wage premium, Returns to education, Educational outcomes, Human capital development, Mexico


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