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Maquiladoras and Standard of Living in Mexico Before and After NAFTA

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Author Info
Julio Huato (City University of New York - Graduate Center - Economics Department)
Abstract

This study assesses the impact across states of for-export, mostly foreign-owned manufacturing plants (commonly known as 'maquiladoras') on various measures of standard of living in Mexico, namely literacy rate, school attendance rates, housing characteristics, life expectancy, infant mortality, and an overall index of human development. The main data set used is from the population and housing censuses of 1980, 1990, and 2000. The study controls for the effect of nonmaquiladora economic activity and prior growth. To remove the endogeneity, maquiladora activity is instrumented with a measure of road transportation time to the nearest major border city in the United States. The resulting IV-TS- OLS and GLS regressions, pooled and with (state and time) fixed effects, are estimated and the results of the respective Hausman specification tests are reported. I conclude that, overall, with the inclusion of state and time effects, maquiladora activity shows no impact on the measures of standard of living analyzed, with one exception: undergraduate schooling rates.

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Publisher Info
Paper provided by EconWPA in its series Development and Comp Systems with number 0508006.

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Length: 56 pages
Date of creation: 17 Aug 2005
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Handle: RePEc:wpa:wuwpdc:0508006

Note: Type of Document - zip; pages: 56. The appendix tables have many blank pages in between. Scroll down to see them all. I apologize for the inconvenience.
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Related research
Keywords: Maquiladoras; maquila; Mexico; manufacturing; liberalization; social welfare; standard of living; poverty;

Find related papers by JEL classification:
O - Economic Development, Technological Change, and Growth
P - Economic Systems

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. Magnus Blomstrom & Edward N. Wolff, 1994. "Multinational Corporations and Productivity Convergence in Mexico," NBER Working Papers 3141, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Jere R. Behrman & Nancy Birdsall & Miguel Székely, 2001. "Pobreza, Desigualdad, y Liberalización Comercial y financiera en América Latina," RES Working Papers 4262, Inter-American Development Bank, Research Department. [Downloadable!]
  3. 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)
  4. Alarcon, Diana & Zepeda, Eduardo, 1998. "Employment trends in the Mexican manufacturing sector," The North American Journal of Economics and Finance, Elsevier, vol. 9(2), pages 125-145, December. [Downloadable!] (restricted)
  5. Buitelaar, Rudolf M. & Perez, Ramon Padilla, 2000. "Maquila, Economic Reform and Corporate Strategies," World Development, Elsevier, vol. 28(9), pages 1627-1642, September. [Downloadable!] (restricted)
  6. Krueger, Anne O., 1995. "Policy lessons from development experience since the Second World War," Handbook of Development Economics, in: Hollis Chenery† & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 40, pages 2497-2550 Elsevier. [Downloadable!] (restricted)
  7. 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)
  8. Aitken, B. & Harrison, A. & Lipsey, R.E., 1995. "Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States," Papers 95-21, Columbia - Graduate School of Business.
    Other versions:
  9. Leslie Young & Jose Romero, 1991. "A dynamic dual model of the Free Trade Agreement," Proceedings, Federal Reserve Bank of Dallas, pages 25-37.
  10. Blomstrom, Magnus & Persson, Hakan, 1983. "Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry," World Development, Elsevier, vol. 11(6), pages 493-501, June. [Downloadable!] (restricted)
  11. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Timothy J. Kehoe, 1992. "Modeling the dynamic impact of North American free trade," Working Papers 491, Federal Reserve Bank of Minneapolis. [Downloadable!]
  13. 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.
  14. William C. Gruben, 2001. "Was NAFTA behind Mexico's high maquiladora growth?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 11-21. [Downloadable!]
  15. Brown, D.K. & Deardorff, A.V. & Stern, R.M., 1991. "A North American Free Trade Agreement: Analytical Issues and A Computational Assessment," Working Papers 289, Research Seminar in International Economics, University of Michigan.
  16. César Patricio Bouillon & Arianna Legovini & Nora Lustig, 2003. "Rising Inequality in Mexico: Household Characteristics and Regional Effects," The Journal of Development Studies, Taylor and Francis Journals, vol. 39(4), pages 112-133, April. [Downloadable!] (restricted)
  17. 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)
  18. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. repec:fth:michin:289 is not listed on IDEAS
  20. Gene M. Grossman & Alan B. Krueger, 1991. "Environmental Impacts of a North American Free Trade Agreement," NBER Working Papers 3914, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  21. 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)
  22. Airola, Jim & Juhn, Chinhui, 2005. "Wage Inequality in Post-Reform Mexico," IZA Discussion Papers 1525, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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