TY  - JOUR
AU  - Henry,Peter Blair
AU  - Sasson,Diego
TI  - Capital Account Liberalization, Real Wages, and Productivity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13880
PY  - 2008
Y2  - March 2008
UR  - http://www.nber.org/papers/w13880
L1  - http://www.nber.org/papers/w13880.pdf
N1  - Author contact info:
Peter Blair Henry
Stern School of Business
New York University
44 West 4th Street, 11-58
New York, NY 10012
Tel: 212/998-0909
E-Mail: pbhenry@stern.nyu.edu

Diego Sasson
Stanford University
E-Mail: dsasson@stanford.edu
AB  - For three years after the typical developing country opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of seven.  No such increase occurs in a control group of developing countries.  The temporary increase in the growth rate of the real wage permanently drives up the level of average annual compensation for each worker in the sample by 752 US dollars -- an increase equal to more than a quarter of their annual pre-liberalization salary.  The increase in the growth rate of labor productivity in the aftermath of liberalization exceeds the increase in the growth rate of the real wage so that the increase in workers' incomes actually coincides with a rise in manufacturing sector profitability.
ER  -