Abstract: OFDI has a wide range of impacts on the home country and the host country. This paper will further study the effect of OFDI on labor price distortion in the home country, analyze its mechanism, measure and test it. The results show that: (1) OFDI aggravates the downward distortion of labor price in China and has a significant trend, and is negatively correlated with the level of regional economic development. (2) OFDI promotes the overall improvement of technology, labor efficiency and wages, but there is structural disharmony. The first is that the increase of labor price deviates from the increase of labor marginal output; the other is that the price of high human capital deviates from that of general human capital. Based on the above situation, we should affirm the positive role of OFDI in economic development, pay attention to the adjustment of labor wage system and mechanism, and realize the coordinated distribution of interests.

Key words: OFDI, labor price distortion, factor market