International Business

Wages, Overseas Investment and Ownership: Implications for Internal Labor Markets in Japan.

Masao Nakamura, University of British Columbia, Vancouver

7th Feb 2012  12:00 pm - Room 6, Darlington Centre

Abstract: Japanese firms expanded their outward foreign direct investment (FDI) rapidly in the emerging economies in Asia in the post-1990 period. The Japanese public feared that companies would increasingly rely on cheaper foreign workers and that large numbers of home country workers would find their responsibilities, and hence their earnings, dwindling over time. However, using several recent data sets on workers in firms with and without FDI investments, we show that workers received earnings premiums if they were with firms that engaged in outward FDI involving ownership of at least 50% in some foreign firm. Higher ranked workers benefited more, but even some non-managerial workers did benefit as well. These wage benefits crucially depend on the level of ownership in FDI projects. Increased foreign employment, on the other hand, did not benefit workers' wages except those in the highest ranks.

BIO: Masao Nakamura received his B.S. and M.S. degrees in administration engineering from Keio University in Tokyo and his Ph.D. degree in operations research and industrial engineering from The Johns Hopkins University. He has also worked for Toshiba as a systems engineer. His research interests include economic behavior of firms and households, corporate governance, international business and Japanese economy, and management of technology and environment. Since 1994 he has been a Professor and the Konwakai Japan Research Chair in the Sauder School of Business and the Institute of Asian Research of the University of British Columbia in Vancouver, Canada. He has published books and also articles in academic journals. His recent publications include: Adoption and Policy Implications of Japan's New Corporate Governance Practices after the Reform, Asia Pacific Journal of Management 28, 2011, 187-213; and Changing Corporate Governance Practices in China and Japan: Adaptations of Anglo-American Practices (Ed.), Palgrave Macmillan, 2008. For further details please see his home page.