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Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico

  • Chiquiar, Daniel

Using individual-level data on personal characteristics and wages and state-level data on trade, foreign direct investment, international migration and other site-specific features, I study what factors determined the changes in Mexico's regional wage differentials between 1990 and 2000. I exploit the regional variation in the exposure to globalization to identify the effects of NAFTA on wages and on returns to schooling. The results support the presence of Stolper-Samuelson type of responses during Mexico's globalization process: regions more exposed to international markets appear to have exhibited an increase in wage levels, but a decrease in returns to schooling, relative to other regions of the country. The results suggest that globalization has an important spatial dimension that is usually neglected in traditional trade models.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 74 (2008)
Issue (Month): 1 (January)
Pages: 70-93

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Handle: RePEc:eee:inecon:v:74:y:2008:i:1:p:70-93
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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