Pandej ChintrakarnDierk HerzerPeter NunnenkampMahidol UniversityHelmut Schmidt University - University of the Federal Armed Forces HamburgInstitut fur Weltwirtschaft an der Universitat Kiel2018-06-112018-06-112012-07-01Economic Inquiry. Vol.50, No.3 (2012), 788-80114657295009525832-s2.0-84863544804https://repository.li.mahidol.ac.th/handle/20.500.14594/13888This study employs state-level panel data to explore the relationship between inward foreign direct investment (FDI) and income inequality in the United States. Using panel cointegration techniques that allow for cross-sectional heterogeneity and cross-sectional dependence, we find that, in the long run, FDI exerts a significant and robust negative effect on income inequality in the United States. This result for the United States as a whole does not imply that FDI narrows income gaps in each individual state. There is considerable heterogeneity in the long-run effects of FDI on income inequality across states, with some states (21 out of 48 cases) exhibiting a positive relationship between FDI in income inequality.(JEL F21, D31, C23) © 2011 Western Economic Association International.Mahidol UniversityBusiness, Management and AccountingEconomics, Econometrics and FinanceArticleSCOPUS10.1111/j.1465-7295.2011.00384.x