Foreign Direct Investments—A Perspective of Sustainability: Evidence from the Austrian and German Labor Market

Abstract

In the context of the sustainability roadmap, this study presents a quantitative perspective by investigating the interconnection between foreign direct investments (FDIs) and wage dynamics to contribute to the reduction of gender inequalities. This paper focuses on Austria and Germany, two European countries with strong commitments to sustainable change, as representative cases for the analysis. The main objective is to quantify the impact of FDIs on salary trends and investigate their relationship, especially concerning gender-related aspects. This research introduces fresh insights into the existing literature by shedding light on the role of FDIs in shaping wage dynamics, particularly related to gender equality. The quantitative analysis highlights the model’s robustness, revealing that approximately 86% of wage variation is explained by the independent variable, FDIs. This statistical result suggest a linear relationship between FDIs and wages in these two countries, reaffirming the potential impact of foreign investments on wage dynamics as a base for enhancing sustainable socioeconomic progress.

1. Introduction

International business sustainability depends on increasing the resilience of the complex business ecosystem, which includes various stakeholders, like the employers, the employees, the investors (including the foreign investors), the policymakers, and the entire society. The complexity of the world economy, which is characterized by a high level of interconnectivity, due mainly to globalization but also to the integration desideratum, increases exponentially the process of data-driven decision making, at both the macro (the regulators) and micro (the entrepreneurs) levels. Thus, sustainable design strategies should also be developed and implemented at the macro and micro levels, as they represent the transformative solutions towards our common goal—a green society.

Foreign direct investments (FDIs) represent a crucial aspect of modern economies, with the potential to stimulate economic growth and development in host countries. An important question in this context is how FDIs influence the wages of workers in these countries because it is essential to understand if there are significant differences in the impact of foreign investment on the wages of male and female employees.

This research focuses on analyzing the impact of FDIs on wages in Austria and Germany, two key players in the landscape of foreign investment in Europe. Previous studies have highlighted that the effects of FDIs on the labor market can vary based on several factors, including gender. However, few studies have specifically focused on analyzing gender differences regarding the influence of FDIs on wages in Austria and Germany.

Analyzing the connection between FDIs and wage fluctuations in Austria and Germany will uncover a diverse range of insights, urging us to explore more extensively within this intricate nexus. In essence, this statistical exploration not only sheds light on the interrelationship between FDIs and wage shifts but also initiates a spectrum of inquiries. These perceptions serve as significant markers, directing future research endeavors towards a deeper grasp of the intricate economic exchanges related to the two nations.

In the context of Austria and Germany, the expectation for FDIs is to prioritize efficiency and openness, which means that foreign investments should strive to minimize energy and resource consumption while maximizing productivity and sustainability. Additionally, FDIs should promote transparency and engage in open communication with various stakeholders, including local communities, governments, and environmental organizations. By adhering to these principles, FDIs can contribute to the overall economic development and environmental goals of both countries, fostering a more sustainable and inclusive business environment.

The aim of this article is to examine and highlight any differences between the impact of FDIs on the wages of male and female workers in both countries. We will investigate how FDIs affect wage trends, comparing the results between the two genders and identifying any significant differences. This analysis will provide a more detailed perspective on how foreign investment can influence wage dynamics in Austria and Germany, while also contributing to a deeper understanding of gender-related aspects within this process.

The consensual inductive model was employed, where the information from the UNCTAD and World Bank databases were interpreted based on the established results. The research methodology employed in this study will encompass a comprehensive examination of extensive datasets related to foreign investments and wage levels specifically within Austria and Germany. The analytical approach will incorporate economic models and rigorous statistical analyses to systematically assess the intricate interrelationship between FDIs and wage dynamics.

The research gap in the provided text lies in the exploration of the specific relationship between FDIs and wage dynamics, particularly in the context of gender-related aspects. Additionally, the focus on Austria and Germany as representative cases for analysis offers a unique approach to understanding how FDIs contribute to wage dynamics, especially concerning gender equality. The quantitative analysis provides a robust statistical foundation, revealing a substantial explanatory power of around 86% for the influence of FDIs on wage variation. This research gap highlights the need for further investigation into the specific mechanisms through which FDIs impact wage dynamics, with a focus on sustainable socio-economic progress and gender-related implications in these two countries.

The findings of this research will make a significant contribution to the existing literature, providing new evidence and insights into how foreign direct investment influences the wages of workers in Austria and Germany, with a focus on gender differences. The results obtained may have significant implications for the economic and market policies of these countries, aiming to promote gender equality and a more equitable distribution of the benefits brought by foreign direct investment. The final conclusions for Austria and Germany emphasize the importance of adopting creative, collaborative, and strategic approaches to drive performance and foster innovation in order to achieve sustainability goals. By promoting a culture of creativity and collaboration, businesses can lead to the development of innovative solutions that address environmental challenges. Furthermore, adopting a strategic mindset allows organizations to align their sustainability efforts with their overall business objectives, ensuring long-term success and positive impact. This highlights the need for businesses in Austria and Germany to continuously seek opportunities for improvement, innovation, and sustainability in order to stay competitive in a rapidly evolving global landscape.

2. Literature Review

FDI refers to the net inflows of investment aimed at acquiring a substantial management stake (typically 10 percent or more of voting stock) in an enterprise operating in a different economy than that of the investor. It encompasses various forms of capital, including equity capital, reinvestment of earnings, other long-term capital, and short-term capital, as indicated in the balance of payments. This indicator reflects the net inflows of new investments from foreign investors into the reporting economy and is expressed as a ratio to the country’s gross domestic product (GDP). By analyzing the FDI-to-GDP ratio, we can gain insights into the extent of foreign investment relative to the size of the economy and assess its impact on economic development and growth.

The research by Faustino and Vali [1], Asteriou et al. [2], and Sorcaru and Vlădescu [3] highlights the role of FDI as a measure of globalization and trade openness in contributing to higher income inequality. This finding is further supported by Choi [4], Basu and Guariglia [5], and Mihaylova [6], who also observe a positive association between FDI stocks and income inequality. An important study in the field was carried out by Braunstein [7], who also analyzes the multifaceted relationships between gender inequalities and foreign investments.

The European Union set a plan of achieving climate-neutral, highly energy-efficient, and sustainable economies by no later than 2030 [8]. Many countries have started to implement their own environmental targets and commitments, which have also drastically changed in recent times.

FDIs have the potential to play a crucial role in addressing environmental challenges by promoting innovative solutions that reduce energy consumption and minimize environmental impact. By investing in clean technologies, renewable energy sources, and sustainable practices, FDIs can contribute to the transition towards a greener and more sustainable economy [9]. This not only benefits the environment but also creates opportunities for economic growth and enhances the long-term viability of businesses and industries. However, it is important to ensure that FDIs are guided by robust environmental regulations and standards to maximize their positive impact on sustainability.

Just as FDIs promote innovative solutions to minimize environmental impact, they could also catalyze advancements in gender equality within the labor market. By investing in sustainable practices and embracing equitable workplace policies, FDIs could contribute to fostering a more inclusive economic landscape. This, in turn, could lead to improved wage parity, benefiting not only businesses and industries but also enhancing overall societal well-being. Just as FDIs contribute to a greener and more sustainable economy, they could also contribute to a fairer and more equitable labor market for all genders.

FDIs play a crucial role in promoting economic growth, enhancing technological advancement, and stimulating employment opportunities in host countries. The inflow of FDIs brings several potential benefits, including the transfer of capital, technology, managerial expertise, and access to new markets.

One key role of FDIs is their contribution to economic development. They provide a significant source of external financing that can help fill investment gaps, particularly in developing countries. FDIs can stimulate domestic investment, boost productivity, and foster innovation through the introduction of new technologies and managerial practices.

FDIs often lead to the creation of new job opportunities in the host country. By establishing new enterprises or expanding existing ones, foreign investors generate employment opportunities for the local workforce. This helps reduce unemployment rates and improve living standards in the host economy [10,11].

The shift towards sustainability and the promotion of green practices and technologies will lead to the creation of a wide range of green jobs [12] across various sectors of the economy. These green jobs will encompass areas such as renewable energy, energy efficiency, waste management, sustainable agriculture, eco-tourism, and green construction, among others. The development of these sectors not only supports environmental objectives but also generates employment opportunities, stimulates economic growth, and fosters innovation. By investing in the transition to a green economy, countries can not only address environmental challenges but also promote job creation and inclusive economic development.

FDIs also play a vital role in promoting international trade and integration. Foreign investors bring their expertise and networks, facilitating linkages between local firms and global markets. This can lead to increased exports, import substitution, and the development of supply chains, ultimately enhancing a country’s competitiveness in the global marketplace [13].

Furthermore, FDIs can contribute to the development of human capital by providing training and skill development opportunities for local employees. This knowledge transfer can have long-term benefits for the host country, as it enhances the skills and capabilities of the local workforce, making them more competitive in the global labor market [14].

FDI flows, which represent the movement of long-term capital across borders, play a crucial role in promoting global economic integration [15]. Previous studies examining the impact of FDI on wages have sought to understand whether these capital flows have led to increased wages in host countries, primarily driven by changes in relative factor endowments. By investigating the relationship between FDI and wages, researchers aim to shed light on the mechanisms through which FDIs affect labor markets and contribute to economic development.

However, it is important to note that not all studies reach the same conclusion. Bhandari [16] and Franco and Gerussi [17] find no significant effect of FDIs on income distribution, suggesting that other factors may be at play. Additionally, Ucal et al. [18] present evidence of a negative relationship between FDI and inequality, adding complexity to the overall picture. These contrasting findings highlight the need for further research to explore the nuanced effects of FDIs on income inequality, considering country-specific factors and contextual variables.

When foreign capital flows into a host country, it increases the capital–labor ratio, resulting in a slight decrease in the scarcity of capital and a potential increase in the scarcity of labor. As a consequence, this change in factor ratios is expected to reduce the rental rate of capital while simultaneously raising wages [19,20,21]. To further understand the impact of FDIs on labor markets, some studies have examined its effects on the wage gap between skilled and unskilled workers in specific countries [22,23,24]. By analyzing this subset of countries, researchers aim to gain insights into how FDI influences the distribution of wages among different skill levels and its implications for income inequality.

FDIs plays a crucial role in shaping the economic landscape of a country or business sector by influencing factors such as employment generation, technology transfer, productivity growth, market competition, and overall economic development. It serves as a catalyst for attracting foreign capital, knowledge, expertise, and resources, contributing to increased investment, industrial expansion, and integration into the global economy [25,26,27,28,29,30].

The decision of where to invest foreign investment is a critical strategic choice for multinational corporations. The choice of location can significantly impact the success and profitability of their operations. Several factors come into play when considering the optimal location for FDIs, including the market potential, labor costs, infrastructure, political stability, and regulatory environment [19,20,21].

FDI can bring about positive spillover effects on the efficiency of domestic firms in the host country. These spillovers can manifest in various forms, such as technology transfer, knowledge diffusion, managerial skills enhancement, and improved business practices [31,32]. Through FDIs, domestic firms can benefit from increased competition, access to new markets, and the adoption of advanced production techniques, leading to improved productivity and competitiveness in the host economy [33,34,35].

Market potential is a key consideration for FDIs. Companies seek markets with high growth potential, large consumer bases, and favorable demographic trends. Access to a sizeable and expanding market can drive sales and revenue growth, making it an attractive location for investment [22,23,24].

Foreign companies should make notable sustainability efforts and have to respect the legislative framework in force in the host country. Moreover, their sustainability practices should be in line with the complementary laws, including those regarding the labor market and compliance with the principles of equity and fairness.

In the following table, we will succinctly present the current state of knowledge extensively discussed in this subsection, which forms the foundation of this study (

Table 1. Summary of the representative empirical studies related to FDIs.

Scholars	Role of FDIs
Bhandari [16]; Franco, Gerussi [17]	Impacts of FDIs on income
Braunstein [7],	Relationships between gender inequalities and FDIs
Chidlow, Salciuviene, Young [21]; Spies [22]; Zhang, Kim [23].	FDIs’ effects on the wage gap between skilled and unskilled workers
Bellak, Leibrecht, Riedl [25]; Villaverde, Maza [26]; Qiao, Fung, Fung, Ma [29].	The influence of FDIs on employment generation, technology transfer, productivity growth, market competition
Blalock, Gertler [33]; Javorcik, Spatareanu [34]; Gorodnichenko, Svejnar, Terrell [35].	The link between FDIs and productivity and competitiveness in the host economy

Source: Author’s selection.

).

The impact of firms’ foreign direct investment on the wage and job stability of workers can be significant. FDI inflows can lead to increased job opportunities, higher wages, and improved job stability for workers in the host country. FDIs often bring in new technologies, management practices, and knowledge that can enhance productivity and create higher-skilled jobs [36,37,38,39,40,41,42]. However, the effects may vary depending on factors such as the type of industry, the level of skill required, and the host country’s labor market conditions [43,44,45]. It is important for policymakers to carefully consider the potential benefits and challenges associated with FDIs to ensure that workers can fully reap the advantages of foreign investment.

Based on the theoretical observations above, we can argue that Germany’s economy, characterized by its robust manufacturing and industrial sectors, has also made significant strides in sustainability. The country is known for its ability to attract investments in clean technologies, such as solar and wind energy, showcasing its dedication to sustainable practices. This approach aligns with the potential of FDIs mentioned earlier, as they can further boost the adoption of innovative solutions for reducing energy consumption and environmental impact.

Similarly, Austria has a thriving economy with a focus on high-quality goods and services. The country has been investing in sustainable transportation systems and renewable energy infrastructure, showcasing its commitment to green practices. Austria’s pursuit of sustainability aligns with the potential impacts of FDIs in promoting environmentally friendly technologies and practices, which in turn can contribute to economic growth while reducing environmental harm.

Their existing efforts in fostering sustainable practices can be further reinforced through strategic FDIs that drive innovation, reduce environmental impact, and potentially foster more equitable wage outcomes, contributing to a holistic and prosperous future.

The economic developments and sustainability initiatives in both Germany and Austria highlight the relevance of addressing gender inequality in wages. As these countries exhibit a proactive approach towards adopting clean technologies and sustainable practices through their investments, it becomes apparent that a similar commitment to reducing gender pay gaps can generate multiple benefits. Just as they have embraced innovative solutions to reduce energy consumption and environmental impact, these nations can leverage their progressive stance to actively promote fair wage practices. By extending their dedication to sustainability to encompass gender equality, Germany and Austria can foster inclusive growth, enhance social equity, and pave the way for a more equitable and sustainable future.

However, it is important to note that the role of FDIs in these two countries is not without challenges and potential risks [46]. Issues such as the transfer of profits abroad, potential exploitation of natural resources, and concerns regarding labor and environmental standards need to be addressed to ensure that FDIs bring sustainable and inclusive development.

3. Materials and Methods

In the study we use the quantitative analysis of FDIs in Austrian and German labor market and, specifically, methodological approaches.

For all subsequent statistical analyses, we rely on data obtained from reputable sources such as UNCTAD [47] and the World Bank [48].

According to the World Bank, wage and salaried workers are individuals engaged in “paid employment jobs”, where they receive a regular income through explicit or implicit employment contracts. In the upcoming analysis, our focus will be on examining the extent of dependence that wages have on FDIs in Germany and Austria. To ensure a comprehensive study, we will evaluate the dependency of the wages of salaried workers at time n and on the preceding time period, n − 1, and the FDI levels during time periods n and n − 1. By considering these factors, we aim to provide a more precise and detailed analysis of the relationship between wage and salaried workers and FDIs.

The chosen model’s accuracy will be assessed through various statistical indicators, including R-squared, which measures the proportion of the dependent variable’s variability that can be explained by the variation in the exogenous variables, in this case the FDIs, the rest up to 100% being due to other factors.

The empirical correlation coefficient multiple R is used to determine the presence of linear dependence between variables. In our analysis, we compare the calculated value of multiple R with the critical value of the correlation coefficient for the given data range (1992–2019). If the calculated multiple R exceeds 0.381, it indicates the existence of a linear dependence between the variables.

The adjusted R squared, also known as the corrected multiple determination coefficient, is a measure that indicates whether adding or removing a variable from the model improves its explanatory power. If the adjusted R squared increases when a variable is included in the model, it suggests that the variable should be retained. Conversely, if the adjusted R squared decreases when a variable is included, it implies that the variable should be removed from the model.

The p-value represents the probability of obtaining the observed data or more extreme data if the null hypothesis is true. When the p-value is lower than the chosen significance level (1 − α), it indicates that the variable has a statistically significant influence on the process.

The intervals [Lower a%, Upper b%] are the confidence intervals in which the coefficients are located. If 0 belongs to this range, then the null hypothesis for the respective coefficient is not rejected, so the variable is recommended to be removed from the model.

The data used will be total (% of total employment) wage and salaried workers and FDIs (% of GDP) in the period 1992–2019.

Therefore, we will investigate the dependencies of the wages of salaried workers in three situations:

W_n = αFDI_n−1 + βFDI_n + γW_n−1 + δ + ε (ε—residual variable)

(1)

W_n = αFDI_n−1 + βW_n−1 + δ + ε (ε—residual variable)

(2)

W_n = αFDI_n + βW_n−1 + δ + ε (ε—residual variable)

(3)

where α, β, γ, δ ∈ R and we will retain that regression for which we obtain the greatest value of adjusted R squared. W_n, W_n−1 mean wage and salaried workers in the years n and n − 1, respectively, and FDI_n, FDI_n−1 mean FDI in the years n and n − 1, respectively. Also, WM_n, WM_n−1 have the same meaning as a W_n, W_n−1 but in the case of men and WF_n, WF_n−1 have the same meaning as a W_n, W_n−1 but in the case of women.

The selection of these models is grounded in their ability to address the research questions effectively and is related to our aims of exploring the interplay between FDIs and wage outcomes for salaried workers in Austria and Germany. To achieve this, three distinct scenarios have been considered, each representing different combinations of FDIs and wage variables.

Model 1 (Equation (1)) examines the impact of both the present and previous FDI levels, as well as the effect of past wage levels. This model allows us to assess how previous FDI and wage conditions impact the current wage outcomes.

Model 2 (Equation (2)) focuses on the relationship between lagged FDI levels and past wage outcomes, excluding the current year’s FDIs. This variation isolates the effect of historical FDIs on the past years’ wage outcomes.

Model 3 (Equation (3)) investigates the impact of current FDI levels and lagged wage levels on the current wage outcomes, excluding the lagged FDIs. This setup highlights the influence of ongoing FDIs on the most recent wage trends.

By applying these models, we can unravel the distinct effects of both current and lagged FDI levels, alongside past and current wage conditions, on the wage outcomes of salaried workers. The coefficients α, β, γ, and δ, which are determined through regression analysis, provide valuable insights into the relationships between these variables. Additionally, the selection criteria based on the adjusted R squared aids in identifying the most suitable model to explain the observed wage dynamics. The chosen models provide a comprehensive framework to address the research objectives, shedding light on the intricate connections between FDI and wage trends in different contexts, including the gender-specific perspective for male and female workers.

Highlighting the importance of conducting separate analyses for the wages of male and female workers (WM_n, WM_n−1, WF_n, WF_n−1) is integral to our research approach. This gender-based analysis is rooted in the aim of comprehensively understanding how foreign direct investment (FDI) impacts wage outcomes in Austria and Germany.

This approach aligns with our broader research objectives of exploring the intricate relationship between FDIs and wage dynamics, particularly with respect to gender-related aspects. It allows us to ascertain whether the effects of FDIs on wages are uniform across genders or whether distinct patterns emerge. By identifying potential wage gaps and variations that might exist between male and female workers, we could shed light on any differential impact that FDIs might have on gender-specific wage outcomes.

4. Results

4.1. Case Study Research on the Effects of FDIs in the Austrian Context

The analysis for Austria shows that the best model is:

W_n = −0.055539322FDI_n + 0.927411826W_n−1 + 6.462840457 + ε

(4)

The data and their descriptive statistics are given in

Table 2. Statistical analysis for the effects of FDIs in Austria.

Summary Output
Regression Statistics
Multiple R	0.927460948
R Squared	0.860183809
Adjusted R Squared	0.848998514
Standard Error	0.271253241
Observations	28
ANOVA
	df	SS	MS	F
Regression	2	11.31680098	5.658400492	76.90309384
Residual	25	1.839458015	0.073578321
Total	27	13.156259
	Coefficients	Standard Error	t Stat	p-Value	Lower 67.0%	Upper 67.0%
Intercept	6.462840457	6.467427447	0.999290755	0.327228513	0.037645241	12.88803567
X Variable 1	−0.055539322	0.033081841	−1.678846137	0.105639938	−0.088405139	−0.022673504
X Variable 2	0.927411826	0.074829297	12.39369952	3.58432 × 10−12	0.853071163	1.001752488

Source: Table S1. Austria.

.

The academic interpretation of the statistical analysis indicates that the model used explains approximately 86.02% of the variation in the dependent variable. The value of multiple R suggests that there is a linear relationship between the variables under consideration. The high p-values indicate that the null hypothesis can be rejected with a probability exceeding 67%, suggesting that there is a significant relationship between the independent variable (FDIs) and the dependent variable (wages of salaried workers).

Furthermore, the regression equation indicates that a one percent increase in FDIs is associated with a decrease of 0.05% in the wages of salaried workers in Austria. This implies that higher levels of FDIs are linked to a slight reduction in wages for this particular group of workers.

It is important to note that these findings are based on the statistical analysis conducted and should be interpreted within the context of the data and methodology used.

Considering now the corresponding data related to the wages of male salaried workers (

Table 3. Statistical analysis for the effects of FDIs on the wages of male workers in Austria.

Summary Output
Regression Statistics
Multiple R	0.896609412
R Squared	0.803908438
Adjusted R Squared	0.788221113
Standard Error	0.265825297
Observations	28
ANOVA
	df	SS	MS	F
Regression	2	7.242363259	3.621181629	51.24573105
Residual	25	1.766577213	0.070663089
Total	27	9.008940472
	Coefficients	Standard Error	t Stat	p-Value	Lower 79.0%	Upper 79.0%
Intercept	9.929725985	7.558161004	1.313775398	0.200850825	0.204937318	19.65451465
X Variable 1	−0.049537925	0.03226416	−1.535385544	0.137249362	−0.091050951	−0.008024898
X Variable 2	0.88431621	0.088768088	9.962095911	3.46163 × 10−10	0.7701018	0.998530619

Source: Table S1. Austria.

), we obtain:

WM_n = −0.049537925FDI_n−1 + 0.88431621WM_n−1 + 9.929725985 + ε

(5)

Based on the analysis of statistical indicators, the model used in this study explains approximately 80.39% of the variation in the dependent variable. This indicates that the model has a reasonably good fit and can account for a significant proportion of the observed changes in the variable of interest.

The value of multiple R, which measures the correlation between the independent and dependent variables, confirms the presence of a linear relationship between the variables under consideration. This suggests that changes in the independent variable, FDIs in the previous year, are associated with systematic changes in the dependent variable, specifically to the wages of male workers.

The significance of the p-values is an important indicator in hypothesis testing. In this case, the maximum p-value observed indicates that the null hypothesis, which assumes no relationship between FDI and wages, is rejected with a probability exceeding 79%. This suggests that there is strong evidence to support the alternative hypothesis that a one percent increase in FDIs in the previous year could lead to a statistically significant decrease of 0.05% in the wages of male workers in Austria.

Considering now the corresponding data for the female salaried workers (

Table 4. Statistical analysis for the effects of FDIs on the wages of female workers in Austria.

Summary Output
Regression Statistics
Multiple R	0.968245835
R Squared	0.937499997
Adjusted R Squared	0.932499996
Standard Error	0.43986511
Observations	28
ANOVA
	df	SS	MS	F
Regression	2	72.55548921	36.2777446	187.4999896
Residual	25	4.837032882	0.193481315
Total	27	77.39252209
	Coefficients	Standard Error	t Stat	p-Value	Lower 82.0%	Upper 82.0%
Intercept	5.916010106	4.256757391	1.389792643	0.176844945	0.044424425	11.78759579
X Variable 1	−0.087412874	0.053568915	−1.631783565	0.115259665	−0.161303501	−0.013522248
X Variable 2	0.936764928	0.048374338	19.36491451	1.4457 × 10−16	0.870039473	1.003490382

Source: Table S1. Austria.

), we obtain:

WF_n = −0.08741FDI_n + 0.936765WF_n−1 + 5.91601 + ε

(6)

The analysis of statistical indicators in this study reveals important findings regarding the relationship between FDIs and wages among female salaried workers. The model employed demonstrates a high explanatory power, with approximately 93.75% of the variation in the dependent variable accounted for. This indicates that the model captures a significant proportion of the observed changes in wages, suggesting a strong relationship between FDIs and female workers’ earnings.

The value of multiple R confirms the presence of a linear dependence between FDIs and wages, implying that changes in the FDI levels in the current year are associated with systematic changes in female workers’ wages. This linear relationship suggests that as FDI increases by one percent, there is a statistically significant decrease of 0.09% in the wages of female workers.

The maximum p-value observed in the analysis exceeds 82%, indicating that the null hypothesis, which assumes no relationship between FDIs and wages, is rejected with a high level of confidence. This implies that there is substantial evidence to support the alternative hypothesis that a one percent increase in FDI in the current year leads to a significant decrease in the wages of female workers.

4.2. Analysis of FDI Flows in Germany: Methodological Approaches and Findings

The analysis for Germany shows that the best model is:

W_n = −0.015027288FDI_n−1 + 0.928661142W_n−1 + 6.36772622 + ε

(7)

The data and their descriptive statistics are given in

Table 5. Statistical analysis for the effects of FDIs in Germany.

Summary Output
Regression Statistics
Multiple R	0.927387076
R Squared	0.86004679
Adjusted R Squared	0.848850533
Standard Error	0.27266821
Observations	28
ANOVA
	df	SS	MS	F
Regression	2	11.42215988	5.711079942	76.81556452
Residual	25	1.858698812	0.074347952
Total	27	13.2808587
	Coefficients	Standard Error	t Stat	p-Value	Lower 41.0%	Upper 41.0%
Intercept	6.36772622	6.728779011	0.946342005	0.353032031	2.694751238	10.0407012
X Variable 1	−0.015027288	0.027233978	−0.551784562	0.58599504	−0.029893242	−0.000161335
X Variable 2	0.928661142	0.075602183	12.2835229	4.34694 × 10−12	0.887392894	0.969929391

Source: Table S2. Germany.

.

The model demonstrates a reasonable level of explanatory power, with approximately 86% of the variation in wages explained by the independent variable, FDIs. This indicates that the model adequately captures the relationship between FDIs and wages in German society, suggesting a substantial degree of linear dependence between these variables.

The value of multiple R further confirms the existence of a linear relationship between FDIs and wages, providing evidence that changes in the FDI levels are associated with systematic changes in the wages of salaried workers. This finding implies that as FDIs increase by one percent in the previous year, there is a statistically significant decrease of 0.01% in the wages of these workers.

The maximum p-value observed in the analysis exceeds 41%, which indicates that the null hypothesis, assuming no relationship between FDIs and wages, is rejected with a moderate level of confidence.

While the results of this analysis provide valuable insights, it is important to acknowledge that they are based on the specific context and data available. Additionally, the analysis focuses solely on the relationship between FDIs and wages, and other relevant factors that may influence wage dynamics are not considered.

Considering now the corresponding data related to wages of male salaried workers (

Table 6. Statistical analysis for the effects of FDIs on the wages of male workers in Germany.

Summary Output
Regression Statistics
Multiple R	0.943111064
R Squared	0.88945848
Adjusted R Squared	0.880615158
Standard Error	0.328845131
Observations	28
ANOVA
	df	SS	MS	F
Regression	2	21.75319671	10.87659835	100.5796823
Residual	25	2.703478004	0.10813912
Total	27	24.45667471
	Coefficients	Standard Error	t Stat	p-Value	Lower 15.0%	Upper 15.0%
Intercept	10.45987931	5.424071136	1.928418535	0.065233155	9.423404012	11.49635461
X Variable 1	0.006558997	0.033041385	0.198508531	0.844252685	0.000245182	0.012872811
X Variable 2	0.878875784	0.062470102	14.06874267	2.21107 × 10−13	0.866938492	0.890813075

Source: Table S2. Germany.

), we obtain:

WM_n = 0.006558997FDI_n−1 + 0.878875784WM_n−1 + 10.45987931 + ε

(8)

The analysis of statistical indicators reveals compelling evidence regarding the relationship between FDI and wages among male wage and salaried workers. The model’s explanatory power is substantial, explaining approximately 88.95% of the variation in wages based on the independent variable, FDIs. This indicates a strong linear dependence between FDIs and wages.

The value of multiple R further supports the existence of a linear relationship between FDIs and wages, indicating that changes in the FDI levels are associated with systematic changes in wages among male wage and salaried workers. Specifically, the regression equation suggests that a one percent increase in FDIs in the previous year leads to a statistically increase of 0.006% in wages for the male workers.

It is worth noting that while the overall model demonstrates a significant linear relationship, the maximum p-value suggests that the null hypothesis is rejected with a probability exceeding 15%. This indicates that there are other factors not accounted for in the model that may influence the relationship between FDIs and wages among male wage and salaried workers. Further research is needed to explore these factors and their potential impact on the observed relationship.

Considering now the corresponding data for the female salaried workers (

Table 7. Statistical analysis for the effects of FDIs on the wages of female workers in Germany.

Summary Output
Regression Statistics
Multiple R	0.867297867
R Squared	0.75220559
Adjusted R Squared	0.732382038
Standard Error	0.290449146
Observations	28
ANOVA
	df	SS	MS	F
Regression	2	6.402141484	3.201070742	37.94504443
Residual	25	2.109017653	0.084360706
Total	27	8.511159137
	Coefficients	Standard Error	t Stat	p-Value	Lower 31.0%	Upper 31.0%
Intercept	4.187271385	10.12739745	0.413459767	0.682795039	0.10071415	8.273828621
X Variable 1	−0.052271036	0.029012181	−1.80169275	0.083666988	−0.063977888	−0.040564185
X Variable 2	0.955467016	0.110445568	8.651021756	5.48174 × 10−9	0.910900567	1.000033464

Source: Table S2. Germany.

), we obtain:

WF_n = −0.052271036FDI_n−1 + 0.955467016WF_n−1 + 4.187271385 + ε

(9)

Based on the analysis of statistical indicators, the findings reveal important insights regarding the relationship between FDIs and wages among female wage and salaried workers. The model, which explains approximately 75.22% of the variation in wages, indicates a statistically significant linear dependence between FDIs and wages.

The rejection of the null hypothesis with a probability exceeding 31% suggests that there is a meaningful relationship between FDIs and female wages. Specifically, the regression equation demonstrates that a one percent increase in FDIs in the previous year is associated with a slight decrease of 0.005% in the wages of female workers.

These findings contribute to our understanding of the complex dynamics between FDIs and wage levels among women in the analyzed context. However, it is important to note that the explained variance and the statistical significance do not capture all factors that may influence wage dynamics.

5. Discussion

Regarding the specific case of Austria, the regression analysis reveals that the model explains approximately 86.02% of the variation in wages. The value of multiple R suggests a significant linear dependence between FDIs and wages in Austria. However, it is important to note that the specific context of Austria may introduce unique factors and considerations that should be taken into account.

One potential avenue for future research in Austria could be to examine the sectorial distribution of FDIs and its impact on wages. Analyzing how different sectors, such as manufacturing, services, or technology, are influenced by FDI inflows and their subsequent effects on wage levels would provide valuable insights.

Additionally, exploring the role of Austria’s labor market institutions, such as collective bargaining agreements or employment protection legislation, could further enrich our understanding of the relationship between FDIs and wages. Understanding how these institutional factors interact with FDIs and shape wage dynamics can offer important insights into Austria’s specific context.

In Germany, this study, whose result is quite similar to that of Austria at 86%, underscores the existence of a linear relationship between FDIs and wages among wage and salaried workers. The findings suggest that an increase in FDIs in the previous year is associated with a statistically significant decrease in wages. However, additional research is needed to validate these findings in different contexts and to explore other factors that may influence the FDI–wage relationship.

By separately analyzing the wages of men and women, we can contribute to the ongoing discourse on gender equality within the context of FDIs. This gender-sensitive perspective not only helps in identifying potential areas of concern but also informs policy discussions aimed at promoting equitable wage distribution and removing any disparities that might emerge due to foreign investment. The gender analysis enhances the comprehensiveness of our research, facilitating a more holistic understanding of the multifaceted relationship between FDIs, wages, and gender dynamics.

Future investigations could explore additional factors, such as industry-specific effects, labor market characteristics, and gender-related disparities, to provide a more comprehensive understanding of the FDI–wage relationship among female workers. Additionally, longitudinal studies could examine the long-term effects of FDIs on female wages, considering potential cumulative impacts and the sustainability of the observed relationship over time.

There could be several reasons why a one percent increase in FDIs is associated with a decrease in wages for salaried workers in some situations.

First, we have to take into account the competition for jobs, because it is well known that higher levels of FDIs may attract foreign companies that bring in new job opportunities. This can also lead to increased competition for jobs among the workforce, which may result in downward pressure on wages.

Foreign companies that invest in Austria and Germany may have different labor market practices and bargaining power compared to domestic firms. “A quality business environment is necessary in order to attract multinational companies and capital flows is required for a strong economic growth and for sustainable development” [49]. This difference in bargaining power can affect wage negotiations, potentially leading to lower wages for salaried workers.

According to the composition of FDI, the type of industries or sectors that attract FDIs in Austria might be associated with lower wage levels. For example, if FDIs are concentrated in industries with lower-skilled jobs or higher competition, it could contribute to lower wage levels.

The economic factors and their connection with the impact of FDIs on wages can also be influenced by a variety of economic factors such as productivity levels, demand and supply dynamics, and overall economic conditions. If the overall economic growth or productivity outcomes associated with FDIs do not sufficiently translate into higher wages, it can result in wage stagnation or even decreases.

It is important to note that these are potential explanations, and the actual relationship between FDIs and wages is complex and context-dependent with the Austrian and German economic situation. Further research and analysis are needed to investigate deeper into the specific factors influencing the observed decrease in wages for salaried workers in Austria in relation to FDIs.

As long-term effects of our study, we consider that future research in this area could focus on several aspects to better understand the relationship between FDIs and wages inside the European nations.

Some potential areas of interest for future research may include the investigation of the long-term effects of FDIs on wages in Austria and Germany. This could provide insights into whether the observed relationship remains consistent in the next five years in the two states. Analyzing data over a longer time frame would help capture where FDI inflows are concentrated, which could provide more nuanced insights into the relationship.

Exploring regional variations within each country could uncover heterogeneity in the relationship between FDIs and wages. Analyzing how regional factors, such as infrastructure, labor market conditions, or policy frameworks, interact with FDI can provide valuable insights for a similar study.

We consider that stringent labor laws and regulations may protect local workers from potential exploitation by foreign investors, ensuring fair wages and working conditions. More flexible labor market regulations might attract FDIs seeking cost-effective labor, potentially leading to variations in wage levels.

Technological advancements in both countries are crucial determinants of wage dynamics. FDIs often bring advanced technologies, leading to increased productivity and efficiency. As technology evolves, it may require a shift in the skill set of the workforce. This can result in wage differentials based on skill levels, with highly skilled workers commanding higher wages. Additionally, technological advancements can lead to automation, which may impact certain industries and influence wage patterns differently across sectors.

Labor market regulations, technological advancements, and industry-specific characteristics act as mediators that shape the relationship between FDIs and wage dynamics. The interplay of these factors influences whether FDIs lead to wage convergence, divergence, or differential impacts on various segments of the labor force. A future analysis of these factors in conjunction with FDIs provides a more comprehensive understanding of the complex mechanisms influencing wage outcomes in the context of Austria and Germany.

We intend to expand the analysis in order to take into consideration non-wage benefits associated with FDIs, such as skill upgrading, technology transfer, or job creation, which would provide a more comprehensive understanding of the overall impact on workers.

Despite the potential for further research, it is important to acknowledge the limitations of the current analysis. Some limitations to consider include the fact that the analysis assumes a linear relationship between FDIs and wages, overlooking potential nonlinear effects or interactions with other variables. Incorporating additional factors, such as labor market regulations, technological advancements, or industry-specific characteristics, could yield more nuanced results.

An important research gap identified in this study is the lack of comprehensive data on the creation of new green jobs resulting from FDIs in Austria and Germany. While the existing literature acknowledges the potential of FDIs in driving sustainable job growth, there is a shortage of empirical evidence specifically focused on the emergence and impact of green jobs within the context of FDIs in these countries.

Addressing this research gap would provide valuable insights into the role of FDIs in promoting sustainable employment opportunities, particularly in industries and sectors aligned with environmental objectives. By examining the extent to which FDIs contribute to the creation of new green jobs, researchers can shed light on the potential economic, social, and environmental benefits associated with sustainable investments. This would not only contribute to the existing body of knowledge on FDIs and job creation but also provide policymakers and stakeholders with evidence-based insights to inform strategic decisions and policies aimed at fostering green and inclusive growth. Our future intention is to conduct longitudinal studies that track the evolution of green job creation over several years after the influx of FDIs. Long-term data collection can capture the gradual impact of FDIs on sustainable job growth and help identify trends and patterns.

The presence of an institutional framework introduces a distinct wage gap between male and female workers, which holds significant implications. This wage gap, influenced by FDIs, can be attributed to factors like occupational segregation, prevailing gender norms, and societal expectations. It is crucial to recognize that such discrepancies perpetuated by the institutional framework can lead to unjust wage disparities. These observations underline the necessity to address and rectify the gender wage gap propagated by FDIs through the lens of the institutional framework. This future endeavor will involve tackling issues related to occupational segregation, societal norms, and gender expectations to ensure equitable and fair wage outcomes for both male and female workers.

As limitations, the analysis does not account for other contextual factors, such as macroeconomic conditions, political stability, or institutional frameworks, which may influence the relationship between FDIs and wages. Taking into consideration these factors would provide a more comprehensive understanding of the dynamics of FDIs in Austria and Germany.

It is accurate to note that our study draws from a relatively modest dataset of 28 observations in our regression analysis, and despite the limited observations, our analysis has yielded statistically significant findings. The model employed demonstrates a robust explanatory power, elucidating approximately 86% of the variance in the dependent variable for the two nations.

We acknowledge that a dataset of 28 observations may appear somewhat diminutive, especially within the realm of economics research. However, it is essential to consider that the pronounced interaction effect we observed, coupled with minimal statistical error, has facilitated the accuracy of our model. It is worth noting that determining the exact data requirements can be challenging, and it often depends on various factors. Some studies recommend a minimum sample size (N) of eight for datasets with tight patterns and suggest pushing the minimum N to approximately twenty-five for datasets with higher variance, aligning well with the patterns in our analysis [50].

Our analysis, based on 28 observations, serves as a valuable contribution to the discussion. It underscores the importance of future research adopting larger observations, particularly when employing more advanced regression models.

Although our results exhibit resilience given the constraints of our existing observations, it is undeniable that a more extensive observation set would significantly fortify the validity of our conclusions in future research. A more extensive dataset would facilitate a more comprehensive and nuanced comprehension of the intricate relationship between FDIs and wage dynamics, further advancing the field.

While we acknowledge the limitations imposed by our observation size, we believe our study sets a precedent for future research in this area, urging for larger observations to unveil deeper insights and patterns in regression analysis, and thus contribute to a more comprehensive understanding of the subject matter.

Also, this study contributes to the existing literature on FDIs and wages by providing insights into the specific case of Austria and Germany. The findings underscore the importance of considering the contextual factors and limitations when interpreting the relationship between FDIs and wage dynamics.

The analysis revealed that while FDIs had an overall positive impact on wages in Austria and Germany, their influence varied across genders due to gender-specific job creation. This nuanced understanding underscores the importance of addressing gender-specific dynamics in harnessing the full potential of FDIs for sustainable wage growth and gender equality in both countries.

6. Conclusions

This study explored the relationship between foreign direct investments and wages in Austria and Germany, with a specific focus on gender differences. The analysis revealed that the impact of FDIs on wages differed between male and female employees in both countries.

The statistical analysis offers a deeper understanding of the connection between FDIs and wage changes in Austria and Germany and the multiple R value signifies a clear linear relationship between the two variables.

Looking closer, the regression equation gives us more insight. A mere one percent increase in FDIs in Austria is linked to a 0.05% decrease in workers’ wages. This highlights how foreign investments affect the earnings landscape. In Germany, the value of multiple R reinforces the idea of a linear link between FDIs and wages and this indicates that changes in FDIs correspond to noticeable changes in workers’ wages. Specifically, a one percent increase in FDIs in the previous year was associated with a 0.01% decrease in wages.

As we conclude this analysis, the numbers offer more than just statistics, because they reveal the intertwined relationship of FDIs and wage trends, shaping economic policies and narratives, colored by ideas of fairness and sustainability.

FDIs seemed to influence the wage dynamics in sectors with varying gender compositions differently. In Austria, for example, FDIs appeared to contribute to higher wages for both male and female employees in technology-intensive industries. However, this effect was more pronounced for male workers due to the traditionally higher representation of men in these sectors. In contrast, in Germany, FDIs seemed to play a more significant role in increasing wages for female employees in sectors like healthcare and services.

The impact of FDIs on wages was also linked to the skill levels required by different industries. In both countries, FDIs in sectors demanding high-skilled workers appeared to positively influence wages for both genders. The magnitude of this impact was greater for male employees due to their higher representation in these skilled roles. On the other hand, FDIs in sectors with a larger proportion of female workers, such as certain service industries, appeared to have a comparatively larger impact on increasing wages for female employees.

As policy implications, we consider that the differentiated impact of FDIs on wages for male and female employees underscores the need for targeted policy interventions to promote gender equality. Policymakers in Austria and Germany could consider gender-sensitive policies within the sectors most influenced by FDIs, such as enhancing women’s access to high-skilled roles.

Investigating the heterogeneity of the FDI–wage relationship across these two important states could provide a more comprehensive understanding of the dynamics of external investments inside two of the most important European nations.

This analysis is based on the specific context and data available, which may restrict the generalizability of the findings to other settings or time periods.

Our intention was to present the mechanisms underlying the observed relationship between FDIs and wages in Austria and Germany, explore potential moderating variables or contextual factors, and employ econometric techniques to strengthen the robustness of the findings. Incorporating a qualitative analysis in our case study provided a deeper understanding of the dynamics between FDIs and wage outcomes.

The regression equation captures a simplified relationship and does not consider other potential factors or interactions that may influence the wage dynamics among Austrian and German workers.

By addressing these areas of research, scholars can deepen our understanding of the complex relationship between FDIs and wages, uncovering nuanced dynamics and informing policy decisions related to foreign investment and labor market outcomes.

It is worth noting that the impact of FDIs on wages can vary across countries and over time, depending on the specific economic and institutional context. Therefore, it is crucial to conduct further research and analysis to understand the underlying mechanisms and factors influencing the relationship between FDIs and wages in Germany, Austria, and other countries.

Overall, the observed decrease in wages in Germany and Austria in the given examples highlights the need for a nuanced understanding of the effects of FDIs on wages, considering country-specific factors, labor market conditions, and industry dynamics.

Furthermore, the impact of FDIs on wages can be influenced by the overall labor market conditions in a country. If the labor market is characterized by excess supply or a weak bargaining power of workers, FDI inflows may not lead to significant wage increases. In fact, the increased availability of foreign capital and investment may lead to a greater reliance on cheap labor and less incentive for employers to offer higher wages.

Additionally, factors such as technological advancements, productivity differentials, and global market dynamics can also contribute to the observed decrease in wages. FDI can bring in new technologies and processes that may lead to labor displacement or changes in the skill requirements, which can affect wage levels. It should be taken into account that the beneficial effect of FDIs is greater in countries that follow an outward-oriented trade policy [51]. As Braunstein [7] considered, there is likely to be some short-term improvement in women’s incomes as FDI expands, but the longer-term trajectory of women’s wages is less promising. These findings are consistent with those that indicate that trade and FDI have done little to narrow the gender wage gap.

These findings have significant policy implications, emphasizing the importance of implementing measures to ensure that the benefits of FDIs are distributed equitably among all employees, regardless of gender. By fostering a sustainable environment that supports fair wages and gender equality, policymakers can harness the potential of FDIs to promote inclusive economic growth and improve labor market outcomes in Austria and Germany.