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Rising Wage Inequality in Mexico: Structural Reforms or Changing Labor Market Institutions?

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Author Info
Gurleen Popli () (Department of Economics, The University of Sheffield)

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Abstract

Over the period of the mid-1980s to the mid-1990s Mexico experienced a significant increase in wage inequality. The literature has typically attributed this rise in inequality to trade liberalization and foreign direct investment. We argue, however, that a better explanation can be found in the changing labor market institutions such as declining union power and the declining real value of the minimum wage. We offer evidence to suggest that these domestic institutional changes have indeed contributed to growing wage inequality, and show that the timing of these institutional changes better matches the trajectory of wage inequality in Mexico than does the timing of reforms.

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File URL: http://www.shef.ac.uk/content/1/c6/03/91/72/SERP2005016.pdf
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File Function: First version, 2005
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File URL: http://www.shef.ac.uk/content/1/c6/03/91/72/SERP2005016.pdf
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File Function: Revised version, 2005
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Publisher Info
Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2005016.

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Length: 33 pages
Date of creation: Nov 2005
Date of revision: Nov 2005
Handle: RePEc:shf:wpaper:2005016

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Related research
Keywords: Wage inequality; Structural reforms; Labor Market Institutions; Mexico.;

Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Maloney, William F. & Nunez, Jairo & Cunningham, Wendy & Fiess, Norbert & Montenegro, Claudio & Murrugarra, Edmundo & Santamaria,Mauricio & Sepulveda, Claudia, 2001. "Measuring the impact of minimum wages : evidence from Latin America," Policy Research Working Paper Series 2597, The World Bank. [Downloadable!]
    Other versions:
  2. Zadia M. Feliciano, 2001. "Workers and trade liberalization: The impact of trade reforms in Mexico on wages and employment," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 55(1), pages 95-115, October.
  3. Eduardo Lora, 2001. "Structural reforms in Latin America: What has been reformed and how to measure it?," RES Working Papers 4287, Inter-American Development Bank, Research Department. [Downloadable!]
    Other versions:
  4. Gordon H. Hanson, 2003. "What Has Happened to Wages in Mexico since NAFTA?," NBER Working Papers 9563, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S20-43, July. [Downloadable!] (restricted)
  6. Chinhui Juhn & Jim Airola, 2005. "Wage Inequality in Post-Reform Mexico," Working Papers 2005-01, Department of Economics, University of Houston. [Downloadable!]
    Other versions:
  7. Hanson, Gordon H, 1997. "Increasing Returns, Trade and the Regional Structure of Wages," Economic Journal, Royal Economic Society, vol. 107(440), pages 113-33, January. [Downloadable!] (restricted)
  8. Nora Lustig, 2001. "Life Is Not Easy: Mexico's Quest for Stability and Growth," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 85-106, Winter. [Downloadable!] (restricted)
  9. Fairris, David & Popli, Gurleen & Zepeda, Eduardo, 2006. "Minimum wages and wage structure in Mexico," MPRA Paper 400, University Library of Munich, Germany, revised 2006. [Downloadable!]
  10. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(2), pages 271-288, January.
  11. David Fairris, 2003. "Unions and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(3), pages 481-497, April. [Downloadable!] (restricted)
  12. Behrman, Jere R & Deolalikar, Anil B, 1991. "School Repetition, Dropouts, and the Rates of Return to Schooling: The Case of Indonesia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(4), pages 467-80, November.
  13. Binder, Melissa & Woodruff, Christopher, 2002. "Inequality and Intergenerational Mobility in Schooling: The Case of Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 50(2), pages 249-67, January.
  14. 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, vol. 51(1), pages 99-116, October. [Downloadable!] (restricted)
  15. Rudiger Dornbusch & Alejandro Werner, 1994. "Mexico: Stabilization, Reform, and No Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994-1), pages 253-316. [Downloadable!]
  16. Eduardo Lora, 1997. "A Decade of Structural Reform in Latin America: What Has Been Reformed and How to Measure It," RES Working Papers 4074, Inter-American Development Bank, Research Department. [Downloadable!]
  17. 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, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  18. Esquivel, Gerardo & Rodriguez-Lopez, Jose Antonio, 2003. "Technology, trade, and wage inequality in Mexico before and after NAFTA," Journal of Development Economics, Elsevier, vol. 72(2), pages 543-565, December. [Downloadable!] (restricted)
  19. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mariano Bosch & Marco Manacorda, 2008. "Minimum Wages and Earnings Inequality in Urban Mexico. Revisiting the Evidence," CEP Discussion Papers dp0880, Centre for Economic Performance, LSE. [Downloadable!]
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