Labour Quality and Inward FDI: A Firm-level Empirical Study in China

This paper uses a large sample of Chinese cross-section firm-level data with comprehensive information about labour quality to investigate the relationship between labour quality and FDI distribution in China. Using parametric, IV-GMM and non-parametric techniques, the author finds that labour quality measured by education level plays an important role on deciding the distribution of FDI but labour quality measured by working certificates lose their significance. The author also finds that labour quality has a more significant impact on other foreign investments than HMT invested firms and the impacts of labour quality on FDI is strongly uneven across industries and provinces.