The Study On The Influence Of OFDI On The Wage Level Of The Parent Company

Driven by the background of China's ‘going global' strategy,the number and amount of foreign direct investment of Chinese enterprises are increasing and the scale is expanding day by day.China's position of investment in the world is becoming more and more important.Compared with the developed countries' more mature transnational investment,the foreign direct investment of Chinese enterprises may have greater and deeper impacts on the economic development what is a matter of concern to comprehensively and deeply explore these impacts.Because it will bring a higher level for Chinese government to reasonably formulate foreign direct investment policies and enterprises to reasonably implement outward foreign direct investment which has practical significance.First of all,this paper reviews the existing literatures and theories,summarizes the impact of outward foreign direct investment on the employment structure and wage level of the country,industry or enterprise in the current research.Most studies use macro data to research and find that outward foreign direct investment increases the demand for skilled labor and entirely improves the labor income level but the income gap will also expand.Secondly,this paper analyzes three paths of the impact of outward foreign direct investment on employees' wages.The three paths are,the productivity effect which means outward foreign direct investment brings advanced technology level.R&D input effect which means outward foreign direct investment increases company's capability of researching and increases the attention of enterprises to R&D.Premium of overseas subsidiaries effect,which means outward foreign direct investment complements the advantages of parent company and subsidiary company reducing costs and improving profitability,so it improves employees' wage level.Then,this paper uses the data of Chinese listed companies' outward foreign direct investments from 2008 to 2015,and uses PSM-DID model to conduct empirical test.The results show that the listed companies' outward foreign direct investment has a significant positive impact on employees' wages.It is concluded that outward foreign direct investment has a short duration sustained and during that period the effect on the average wage increases.Further,this paper classifies and studies industry,trade and region of the enterprise investment.The empirical results show outward foreign direct investment with secondary industry enterprises has a significant positive impact on the wage level of employees.However,the impact of the first industry and the third industry is not significant.Manufacturing enterprises' outward foreign direct investment will improve the wage level of employees,while the impact of non-manufacturing enterprises is not significant.Located in the eastern regions enterprises' outward foreign direct investment has a significant positive impact on the wage of employees,but the impact of enterprises in central regions and western regions are not significant.Then,this paper uses Sobel intermediary factor test to test and verify the three theoretical mechanisms of the impact of outward foreign direct investment on employees' wages and incomes.Results show the three influence paths all have significant effects,which further verifies the rationality of the theoretical mechanism.Finally,based on the conclusion,this paper puts forward policy suggestions from two perspectives,one perspective is enterprises,the main body of foreign direct investment,another one is the government which has an important influence on foreign direct investment.These suggestions are put forward to optimize the investment strategy of enterprises' outward foreign direct investment and promote the development of outward foreign direct investment in China.