Are local workers better‐off from foreign presence? A firm‐level panel data analysis of a service industry

Abstract This study extends the international investment literature by shedding light on the impact of foreign presence on the host country's workforce in a highly skilled service industry. The empirical analyses utilize a rich panel dataset of firms in the professional, scientific and technical service industry of Vietnam's emerging economy. The adopted estimation strategy takes into account possible endogeneity problem and measurement bias. The results indicate that local workers in the industry are generally better‐off from the presence of foreign firms which pay much higher and simultaneously induce domestic counterparts to pay higher. The subgroup analyses provide deeper insights into the heterogeneous impact of foreign presence, carrying important implications for the local labour market.