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Trade Liberalization and Wage Inequality in Mexico


  • Gordon H. Hanson
  • Ann Harrison


During the 1980s in Mexico the wage gap between skilled and unskilled workers widened. The authors assess the extent to which this increased wage inequality was associated with Mexico's sweeping trade reform in 1985. Examining data on 2,354 Mexican manufacturing plants for 1984–90 and Mexican Industrial Census data for 1965–88, they find that the reduction in tariff protection in 1985 disproportionately affected low-skilled industries. Goods from that sector, the authors suggest, may have fallen in price because of increased competition from economics with reserves of cheap unskilled labor larger than Mexico's. The consequent increase in the relative price of skill-intensive goods could explain the increase in wage inequality.

Suggested Citation

  • Gordon H. Hanson & Ann Harrison, 1999. "Trade Liberalization and Wage Inequality in Mexico," ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  • Handle: RePEc:sae:ilrrev:v:52:y:1999:i:2:p:271-288

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    References listed on IDEAS

    1. Machin, Stephen & Stewart, Mark, 1996. "Trade Unions and Financial Performance," Oxford Economic Papers, Oxford University Press, vol. 48(2), pages 213-241, April.
    2. Booth, Alison L, 1991. "Job-Related Formal Training: Who Receives It and What Is It Worth?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(3), pages 281-294, August.
    3. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-371, June.
    4. Greenhalgh, Christine & Mavrotas, George, 1994. "The Role of Career Aspirations and Financial Constraints in Individual Access to Vocational Training," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 579-604, October.
    5. Machin, Stephen & Stewart, Mark B & Van Reenen, John, 1993. " The Economic Effects of Multiple Unionism: Evidence from the 1984 Workplace Industrial Relations Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(3), pages 279-296.
    6. Stewart, Mark B, 1987. "Collective Bargaining Arrangements, Closed Shops and Relative Pay," Economic Journal, Royal Economic Society, vol. 97(385), pages 140-156, March.
    7. Green, Francis, 1993. "The Determinants of Training of Male and Female Employees in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(1), pages 103-122, February.
    8. Geoff Mason & S.J. Prais & Bart van Ark, 1992. "Vocational Education and Productivity in the Netherlands and Britain," National Institute Economic Review, National Institute of Economic and Social Research, vol. 140(1), pages 45-63, May.
    9. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
    10. repec:sae:niesru:v:140:y::i:1:p:45-63 is not listed on IDEAS
    11. Metcalf, David, 1991. "British Unions: Dissolution or Resurgence?," Oxford Review of Economic Policy, Oxford University Press, vol. 7(1), pages 18-32, Spring.
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