An exploration of individual-level wage effects of foreign aid in developing countries

The key research question that this article aims to respond to is: what are the individual-level effects of wages financed by development assistance? Our hypothesis is that these effects are substantial and overall positive, depending on the level of analysis. This article theorizes about unintended wage effects at the individual level, spillover effects, and those at the macro level, yet focuses its research on individual-level effects. The empirical part consists of two case studies. One takes a sample of grants from a donor agency, the Netherlands Ministry of Foreign Affairs, as a starting point, following these grants through the aid chain to determine local staffing costs. The other case study consists of a comparative wage analysis in a developing country, the Democratic Republic of Congo. As this field of research is rather fresh, instead of answering relevant questions with respect to wage effects, this study merely aims to identify questions that merit further research.