Spillovers from FDI and Skill Structures of Host-Country Firms

Abstract

This paper uses panel data across UK manufacturing from 1983 to 1992, to test whether inward flows of FDI have contributed to increasing trends in the employment of relatively higher skilled individuals. Moreover, the paper isolates the effect on domestic firms, and shows that this effect is a function of the size of the foreign productivity advantage. The results show, that even after controlling for the factors most commonly used to explain relative employment shifts – namely technological change and import intensity, that FDI has a role to play in influencing employment trends.

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