Abstract: Economic globalization brings about the rapid development of foreign direct investment in the world. Enterprises actively participate in the international division of labor through outward foreign direct investment (OFDI), then cause the transnational flow of production factors and the fluctuation of their prices, and the national income distribution also change gradually. To promote the good welfare effect of OFDI, it is important to study how OFDI affects the income equity of the home country. The theory of enterprise heterogeneity into endogenous growth model is introduced, and the influence mechanism of OFDI on the income inequality in home country is disscussed. Then based on panel data of 85 countries(regions) from 1981 to 2015, the system generalized moment estimation and threshold panel model are used to do empirical analysis. Results show that there is an inverted-U relationship between OFDI and income inequality, that is, as the intensity of OFDI increases, the income inequality of the home country expands first and then shrinks. On the one hand, technology progress and the upgrading of industrial structure is promoted, and domestic investment is squeezed out by OFDI, which increases the degree of income inequality; on the other hand, the income inequality can be reduced by promoting the financial development and education expansion of the home country. The influence of OFDI on income inequality is heterogeneous among countries with different levels of economic development and different geographical locations. When the per capita GDP is less than MYM5767.53, the OFDI significantly increases the income inequality of the home country. When the per capita GDP exceeds MYM5767.53, there is no significant linear relationship between the OFDI and income inequality. There is a inverted-U relationship between the OFDI and the income inequality in Europe, at the same time, the OFDI of the America and Asia promotes the income inequality of the home country, and the Africa's OFDI has no significant impact on the income inequality. Furthermore, as time goes by, the marginal effect of indirect effects has been weakened by the increase of OFDI stock. The related research on the economic effects of OFDI in a home country is expanded, and it's instructive to enhance the welfare effect of OFDI in different countries.

Key words: OFDI, economic effects in home country, income inequality, cross-country panel data