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How the wage-education profile got more convex: evidence from Mexico

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  • Binelli Chiara

    () (Department of Economics, University of Southampton, UK; and Rimini Center for Economic Analysis, Rimini, Italy)

Abstract

In the 1990s, in many countries, wages became a more convex function of education: returns to college increased and returns to intermediate education declined. This paper argues that an important cause of this convexification was an exogenous increase in the demand for skilled labour: the increased demand stimulated a supply response, and the supply of intermediate-educated workers further increased the demand for college-educated workers because these two types of labour are complementary. This argument is supported by an empirical equilibrium model of savings and educational choices for Mexico, where the degree of convexification was amplified by loosening credit constraints.

Suggested Citation

  • Binelli Chiara, 2015. "How the wage-education profile got more convex: evidence from Mexico," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 509-560, July.
  • Handle: RePEc:bpj:bejmac:v:15:y:2015:i:2:p:509-560:n:6
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    1. repec:eee:hapoch:v1_179 is not listed on IDEAS
    2. Binelli, Chiara & Rubio-Codina, Marta, 2013. "The Returns to Private Education: Evidence from Mexico," Economics of Education Review, Elsevier, vol. 36(C), pages 198-215.
    3. Diego Battistón & Carolina García-Domench & Leonardo Gasparini, 2014. "Could an Increase in Education Raise Income Inequality? Evidence for Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(1), pages 1-39, May.
    4. Todd Schoellman & Berthold Herrendorf, 2014. "Wages, Human Capital, and the Allocation of Labor across Sectors," 2014 Meeting Papers 364, Society for Economic Dynamics.
    5. repec:bla:tvecsg:v:108:y:2017:i:2:p:190-204 is not listed on IDEAS
    6. Berthold Herrendorf & Todd Schoellman, 2017. "Wages, Human Capital, and Structural Transformation," CESifo Working Paper Series 6426, CESifo Group Munich.
    7. Chiara Binelli, 2016. "Wage inequality and informality: evidence from Mexico," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-18, December.

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