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FDI and the growing wage gap in Mexican municipalities

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  • J. Eduardo Ibarra‐Olivo
  • Andrés Rodríguez‐Pose

Abstract

Inward foreign direct investment (FDI) has generally been linked to higher wages, but evidence remains sparse on the overall effects of FDI on average wages, the wage gap between skilled and unskilled labour, and inter‐industry heterogeneity. We address these issues for Mexican municipalities and industries for a period of increasing FDI and sectoral change that saw growing wage inequality. By combining two non‐experimental techniques we find that FDI in Mexico was associated with higher wages, mostly for skilled workers—but also for unskilled ones—and a widening gap between them. Effects vary both between and within industries depending on location, and they either wax or wane when the initial or incremental effects are considered. Las entradas de inversión extranjera directa (IED) se han relacionado generalmente con salarios más altos, pero la evidencia sobre los efectos en general de la IED en los salarios promedio, la brecha salarial entre la mano de obra cualificada y no cualificada y la heterogeneidad entre sectores industriales sigue siendo escasa. El artículo aborda estas cuestiones para los municipios y las industrias mexicanas durante un periodo de aumento de la IED y de cambios sectoriales en el que creció la desigualdad salarial. Combinando dos técnicas no experimentales, se encontró que la IED en México se asoció a salarios más altos, sobre todo para los trabajadores cualificados, pero también para los no cualificados, y a una brecha salarial cada vez mayor entre ellos. Los efectos varían tanto entre sectores industriales como dentro del mismo sector en función de la ubicación, y que aumentan o disminuyen cuando se consideran los efectos iniciales o incrementales. 対内直接投資(FDI) は一般的に賃金の上昇と関連しているが、平均賃金、技術労働者と技術の低い労働者の賃金格差、産業間の不均一性に対するFDIの全体的な影響に関するエビデンスはほとんど得られていない。本稿では、賃金格差の拡大が起きたFDIの増加と部門別の変化の時期における、メキシコの自治体や産業のこれらの問題に取り組む。2つの非実験的手法を組み合わせた分析により、メキシコに対するFDIは、主に技術労働者の高い賃金と関連しているが、技術のない労働者の賃金も上昇し、しかも両者の格差が拡大していることがわかった。効果は産業間および産業内の両方で場所によって異なり、初期または段階的な効果を考慮すると増えても減ってもいる。

Suggested Citation

  • J. Eduardo Ibarra‐Olivo & Andrés Rodríguez‐Pose, 2022. "FDI and the growing wage gap in Mexican municipalities," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1411-1439, December.
  • Handle: RePEc:bla:presci:v:101:y:2022:i:6:p:1411-1439
    DOI: 10.1111/pirs.12707
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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