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Mexico : human capital effects on wages and productivity

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  • Lopez-Acevedo, Gladys
  • Tinajero, Monica
  • Rubio, Marcela
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    Abstract

    The authors follow the Hellerstein, Neumark, and Troske (1999) framework to estimate marginal productivity differentials and compare them with estimated relative wages. The analysis provides evidence on productivity and nonproductivity-based determinations of wages. Special emphasis is given to the effects of human capital variables, such as education, experience, and training on wages and productivity differentials. Higher education yields higher productivity. However, highly educated workers earn less than their productivity differentials would predict. On average, highly educated workers are unable to fully appropriate their productivity gains of education through wages. On the other hand, workers with more experience are more productive in the same proportion that they earn more in medium and large firms, meaning they are fully compensated for their higher productivity. Finally, workers in micro and small firms are paid more than what their productivity would merit. Training benefits firms and employees since it significantly increases workers'productivity and their earnings.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3791.

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    Date of creation: 01 Dec 2005
    Date of revision:
    Handle: RePEc:wbk:wbrwps:3791

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    Related research

    Keywords: Primary Education; Economic Theory&Research; Access&Equity in Basic Education; Labor Markets; Tertiary Education;

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    References

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    1. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
    2. Rosholm, Michael & Nielsen, Helena Skyt & Dabalen, Andrew, 2007. "Evaluation of training in African enterprises," Journal of Development Economics, Elsevier, vol. 84(1), pages 310-329, September.
    3. John Van Reenen, 2000. "Who gains when workers train? Training and corporate productivity in a panel of British industries," IFS Working Papers W00/04, Institute for Fiscal Studies.
    4. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
    5. Sargent, John & Matthews, Linda, 1997. "Skill development and integrated manufacturing in Mexico," World Development, Elsevier, vol. 25(10), pages 1669-1681, October.
    6. Verner, Dorte, 1999. "Are wages and productivity in Zimbabwe affected by human capital investment and international trade?," Policy Research Working Paper Series 2101, The World Bank.
    7. Erica L. Groshen, 1991. "The Structure of the Female/Male Wage Differential: Is It Who You Are, What You Do, or Where You Work?," Journal of Human Resources, University of Wisconsin Press, vol. 26(3), pages 457-472.
    8. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
    9. Maloney, William F. & Pontual Ribeiro, Eduardo, 1999. "Efficiency wage and union effects in labor demand and wage structure in Mexico - An application of quantile analysis," Policy Research Working Paper Series 2131, The World Bank.
    10. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
    11. Hellerstein, Judith K & Neumark, David, 1999. "Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm-Level Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 95-123, February.
    12. Oosterbeek, Hessel & van Praag, Mirjam, 1995. " Firm-Size Wage Differentials in the Netherlands," Small Business Economics, Springer, vol. 7(3), pages 173-82, June.
    13. Barrett, Alan, 1998. "Does Training Generally Work? The Returns to In-Company Training," CEPR Discussion Papers 1879, C.E.P.R. Discussion Papers.
    14. Jacob Mincer, 1989. "Human Capital Responses to Technological Change in the Labor Market," NBER Working Papers 3207, National Bureau of Economic Research, Inc.
    15. repec:fth:coluec:455 is not listed on IDEAS
    16. Judith K. Hellerstein & David Neumark & Kenneth R. Troske, 1996. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," NBER Working Papers 5626, National Bureau of Economic Research, Inc.
    17. Revenga, Ana, 1995. "Employment and wage effects of trade liberalization : the case of Mexican manufacturing," Policy Research Working Paper Series 1524, The World Bank.
    18. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Maliranta, Mika & Asplund, Rita, 2007. "Training and Hiring Strategies to Improve Firm Performance," Discussion Papers 1105, The Research Institute of the Finnish Economy.

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