The Empirical Research On The Influence Of FDI To The Wage Levels In Shandong Province

Since twenty-first Century, the process of trade liberalization and economic globalization are upgrading stage by stage and the sphere of influence is expanding. At the same time, global capital movements are very active, transnational investment scale is also very large. As the main way of capital movements in international market, foreign direct investment (FDI) has attracted close attention for a long time. This is mainly because it’s an important source of investment in fixed assets for host countries, which plays an important role in the upgrading of industrial structure, improvement of employment status and productivity.The foreign capital absorption scale of China has ranked first for a few years. FDI increased economic aggregate effectively and played an important role on income, employment, trade and other aspects. As an important province, the total amount of FDI in Shandong is in front of many other provinces and cities. The inflow of FDI has an important impact on the change of wages. At present, it’s very active on the research of the relationship between FDI and wage levels. The methods and perspectives used in the research are both different. But the existing research in this area is not enough, especially in the case of Shandong province.In this paper, on the basis of research results which is provided by many domestic and foreign scholars, we analyze the impact of FDI to wage levels and wage gaps in detail. The analysis of this paper can be summarized as three respects:firstly, the wage gaps in different industries, regions and economic units; secondly, the reason for the existence and expanding of wage gaps; thirdly, the promotion effect of FDI on the average wage level.Around the above three points, this article briefly reviews the related research about wage gaps and the wage spillover effect of FDI at first. Then we introduce the situations of FDI and wage gaps in different industries, regions and economic units in Shandong province. Wage decision theory is used to analyze the reasons for the existence and expanding of wage gaps in subsequent content. On the basis of theoretical analysis, this paper selects a series of data, which are respectively in the aspect of industries and regions from2000to2010, to do empirical study using panel data model. Through careful study and research, this paper draws three conclusions. The first one is that the wage gaps mainly depend on the workers’ technical level, the productivity of the enterprise, and the total amount of FDI. The inflow of FDI has increased the demand for laborer, and then causes the industry wages to rise, which is the second reason. The last conclusion is that FDI expanded the wage gaps between skilled and unskilled workers. Finally, this article puts forward some suggestions respectively from the industry level and regional level.