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Evolution of earnings and rates of returns to education in Mexico

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  • Lopez-Acevedo, Gladys
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    Abstract

    Reviewing the factors, and mechanisms that have been driving inequality in earnings in Mexico, the author finds that inequality in education, accounts for the largest share by far of the variation in earnings. In fact, the contribution of educational inequality to earnings inequality in Mexico, ranks second in size in Latin America, after that in Brazil, and its significance has been increasing. Moreover, the income effect is always prevalent, and the distribution of education is highly significant, even after controlling for changes in other relevant variables, such as age, region, economic sector, and labor market status. But the increase in earnings inequality in Mexico, does not appear to be the result of a worsening in the distribution of education - although the income profile, which is related to returns to schooling, has become much steeper. This means that the shift in demand toward high-skilled labor, has not been matched by an increase in supply. The probable reason: the increased economic openness in Mexico has facilitated skill-biased technological change.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2691.

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    Date of creation: 31 Oct 2001
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    Handle: RePEc:wbk:wbrwps:2691

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    Related research

    Keywords: Environmental Economics&Policies; Poverty Impact Evaluation; Health Economics&Finance; Economic Theory&Research; Labor Policies; Economic Theory&Research; Governance Indicators; Inequality; Poverty Impact Evaluation; Environmental Economics&Policies;

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    1. Mueller, Richard E., 1998. "Public-private sector wage differentials in Canada: evidence from quantile regressions," Economics Letters, Elsevier, vol. 60(2), pages 229-235, August.
    2. 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.
    3. repec:idb:brikps:52598 is not listed on IDEAS
    4. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    5. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
    6. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-45, May.
    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, vol. 101(3), pages 410-42, June.
    8. Gordon H. Hanson & Ann Harrison, 1995. "Trade, Technology, and Wage Inequality," NBER Working Papers 5110, National Bureau of Economic Research, Inc.
    9. Cesar Patricio Bouillon & Arianna Legovini & Nora Lustig, 2003. "Rising Inequality in Mexico: Household Characteristics and Regional Effects," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 112-133.
    10. Knight, J B & Sabot, R H, 1983. "Educational Expansion and the Kuznets Effect," American Economic Review, American Economic Association, vol. 73(5), pages 1132-36, December.
    11. 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.
    12. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
    13. Leibbrandt, M.V. & Woolard, C.D. & Woolard, I.D., 1996. "The Contribution of Income Components to Income Inequality in South Africa. A Decomposable Gini Analysis," Papers 125a, World Bank - Living Standards Measurement.
    14. Cowell, Frank A, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 521-31, April.
    15. Schultz, T. Paul, 1988. "Education investments and returns," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 13, pages 543-630 Elsevier.
    16. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, vol. 36(1), pages 117-143, July.
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    Cited by:
    1. World Bank, 2005. "Mexico : Determinants of Learning Policy Note," World Bank Other Operational Studies 8284, The World Bank.
    2. Armando Arellano & Thomas Fullerton, 2005. "Educational Attainment and Regional Economic Performance in Mexico," International Advances in Economic Research, Springer, vol. 11(2), pages 231-242, May.

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