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Returns to Education, Sector Premiums, and Male Wage Inequality in Mexico

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  • César P. Bouillon

Abstract

This paper examines Mexico's increase in wage inequality using data from household surveys (Encuesta Nacional de Ingreso Gasto de los Hogares de México) produced by the Mexican Institute for Statistics, Geography and Informatics (Instituto Nacional de Estadística, Geografía e Informática). An econometric simulation technique based on Juhn, Murphy, and Pierce (1993) and developed for the household level by Bourguignon, Fournier, and Gurgand (1998) is used to measure the contribution of changes in skill premiums and sector returns to the increase in inequality in Mexican males' wages during the period of analysis. The household surveys used in this paper make it possible to decompose some of the changes in inequality in Mexico after trade reform in the mid-1980s. The regressions and simulation technique confirm that male Mexican wage earners experienced an important increase in skill premiums and a decrease in sector wage premiums after the trade reform. The increase in skill premiums was unequalizing, while the decrease in sector premiums was equalizing.

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Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 51038.

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Date of creation: Oct 2000
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Handle: RePEc:idb:brikps:51038

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Keywords: Population Statistics & Information Systems; Workforce & Employment; Income; Consumption & Saving; Education; premium wage; sector premium; employment; wage inequality;

References

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  1. Eduardo Lora & Gustavo Márquez, 1998. "The Employment Problem in Latin America: Perceptions and Stylized Facts," Research Department Publications, Inter-American Development Bank, Research Department 4114, Inter-American Development Bank, Research Department.
  2. Tan, Hong & Batra, Geeta, 1997. "Technology and Firm Size-Wage Differentials in Colombia, Mexico, and Taiwan (China)," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 59-83, January.
  3. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, Elsevier, vol. 42(3-4), pages 371-393, May.
  4. Eduardo Lora & Mauricio Olivera, 1998. "Macro Policy and Employment Problems in Latin America," Research Department Publications, Inter-American Development Bank, Research Department 4116, Inter-American Development Bank, Research Department.
  5. Pissarides, Christopher A, 1997. "Learning by Trading and the Returns to Human Capital in Developing Countries," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 17-32, January.
  6. Cragg, Michael Ian & Epelbaum, Mario, 1996. "Why has wage dispersion grown in Mexico? Is it the incidence of reforms or the growing demand for skills?," Journal of Development Economics, Elsevier, Elsevier, vol. 51(1), pages 99-116, October.
  7. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  8. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
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Cited by:
  1. César P. Bouillon, 2000. "Inequality and Mexico's Labor Market after Trade Reform," IDB Publications 53718, Inter-American Development Bank.

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