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Migration Magnet: The Role of Work Experience in Rural-Urban Wage Diff erentials in Mexico

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  • John P. Haisken-DeNew
  • Maren M. Michaelsen

    ()

Abstract

This study estimates separate selectivity bias corrected wage equations for formal and informal workers in rural and urban Mexico using data from the Mexican Family Life Survey (MxFLS). We control for diff erent potential selection patterns using Probit and Multinominal logit models in the fi rst step in which health, personality traits and family characteristics serve as exclusion restrictions for working per se and working in the formal sector. Oaxaca-Blinder Decompositions show that rural-urban wage inequality in the formal and informal sector is determined by diff erences in observable human capital. In the informal sector, the wage diff erential is mainly explained by diff erences in returns to experience. Furthermore, we analyse rural-to-urban migrants‘ labour market performance. The fi ndings suggest that rural-to-urban migration will continue and the informal sector will further increase.

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Bibliographic Info

Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0263.

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Length: 36 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:rwi:repape:0263

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Related research

Keywords: Returns to experience; rural-urban wage diff erentials; informality; internal migration; Mexico;

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  1. Bosch, Mariano & Maloney, William F., 2007. "Gross Worker Flows in the Presence of Informal Labor Markets: Evidence from Mexico, 1987-2002," IZA Discussion Papers 2864, Institute for the Study of Labor (IZA).
  2. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Working Papers 200916, Geary Institute, University College Dublin.
  3. Chang-Tai Hsieh & Peter Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," Working Papers 09-04, Center for Economic Studies, U.S. Census Bureau.
  4. Bosch, Mariano & Maloney, William F., 2008. "Cyclical Movements in Unemployment and Informality in Developing Countries," IZA Discussion Papers 3514, Institute for the Study of Labor (IZA).
  5. Douglas Marcouiller, S.J. & Veronica Ruiz de Castilla & Christopher Woodruff, 1995. "Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador, and Peru," Boston College Working Papers in Economics 294., Boston College Department of Economics.
  6. Gong, Xiaodong & Van Soest, Arthur & Villagomez, Elizabeth, 2004. "Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 53(1), pages 1-36, October.
  7. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
  8. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
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  10. Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, vol. 59(1), pages 165-87, January.
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  12. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
  13. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2008. "Is There an Informal Employment Wage Penalty? Evidence from South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 683-710.
  14. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-42, April.
  15. Javier Arias & Oliver Azuara & Pedro Bernal & James J. Heckman & Cajeme Villarreal, 2010. "Policies To Promote Growth and Economic Efficiency in Mexico," NBER Working Papers 16554, National Bureau of Economic Research, Inc.
  16. Olivier Bargain & Prudence Kwenda, 2010. "Is Informality Bad? - Evidence from Brazil, Mexico and South Africa," Working Papers 201003, School Of Economics, University College Dublin.
  17. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 477-506.
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