The Effects of Foreign Direct Investments on Wage Trends in the Dutch Labor Market

Abstract

In this study, we analyze the relationship between economic variables influencing wages in the Dutch economy during the period 1995–2023 using the ARIMAX method. The analysis reveals that lagged wages and salaries for male workers have a strong and significant effect on current wages, while lagged wages and salaries for female workers exhibit a strong negative influence, indicating a potential gender wage gap. The current level of foreign direct investment (FDI) has a negative impact on wages, suggesting that foreign capital may not contribute to wage growth, and we noted that lagged FDI does not significantly affect current wages. These findings highlight the crucial role of past wages in shaping current wage levels and accentuate that gender disparities remain a significant factor in wage determination. Policymakers should consider addressing these gender wage differences and reassess the role of FDIs in wage growth.