FDI activity and worker compensation: evidence from U.S. non-manufacturing industries

This study examines worker compensation effects of foreign direct investment (FDI) activity in US non-manufacturing industry sectors. A clustered standard error correction is used when estimating wage and non-wage compensation equations, with special attention given to FDI’s effect by worker educational attainment and union status. Wage findings reveal that FDI activity is associated with a wage premium for highly educated non-union workers and with union rent erosion for all educational-gender groups excluding females with low educational attainment. Non-wage compensation analysis reveals FDI activity is generally associated with significantly higher probabilities of workers receiving employer financed non-wage compensation for union and non-union workers regardless of their level of educational attainment.