The impact of FDI inflow on ex-Yugoslav countries’ labour markets

This paper models and discusses the effects of FDI inflow on the employment rate and average net wages in ex-Yugoslav countries. The sample of countries is chosen due to of the high legacy with FDI, both in transitional (Bosnia and Herzegovina, Macedonia, Montenegro and Serbia) and recently developed (Croatia and Slovenia) economies. This paper argues that FDI inflow should have positive effects on the employment rate and on average net wages in the countries examined. Performing linear mixed-effects models on 78 observations in the period 2003–2017, the empirical results indicate that FDI inflow has positive and significant effects on the employment rate and on average net wages, after 2 years and after 3 years, respectively.