The report of the 20th National Congress of the Communist Party of China pointed out the neces- sity to build a “ dual circulation” new development pattern. As an important means for a country to expand its market space, outward foreign direct investment ( OFDI) has a significant impact on domestic labor employment and wage levels. Given the steady growth of China’ s OFDI and the severe domestic employment situation, this paper examines the impact of OFDI on domestic labor wage levels from both theoretical and empirical perspec- tives. The results show that OFDI has a positive effect on wage levels. Heterogeneity tests based on regions, skill levels, enterprises, and industries reveal that different types of OFDI have varying impacts on wage levels. Mechanism analysis indicates that OFDI exerts its effect through the intermediate paths of per capita GDP and industrial output value. In this context, China should improve the structure of its outward foreign direct invest- ment from both government and corporate levels, enabling multinational enterprises to “ go global” with high quality, thereby stimulating domestic employment and raising labor wage levels.