Capital Market Integration and Wages
|Authors:||Henry, Peter Blair|
|Abstract:||For three years after the typical emerging economy opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of three. No such increase occurs in a control group of countries that do not liberalize. The temporary increase in the growth rate of the real wage drives up the level of average annual compensation for each worker in the sample by $487 U.S.—an increase equal to nearly one-fifth of their annual pre-liberalization salary. The increase in the growth rate of labor productivity in the wake of liberalization exceeds the increase in the growth rate of the real wage so that the increase in workers’ incomes does not drive up unit labor costs. Overall, the results suggest that trade in capital may have a larger impact on wages than trade in goods.|
|Appears in Collections:||Finance Working Papers|
Files in This Item:
|Capital Market Integration and Wages.pdf||Main Working Paper||360.62 kB||Adobe PDF||View/Open|
Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.