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Capital and Labour Mobility and their Impacts on Mexico's Regional Labour Markets

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  • Rene Cabral
  • Andre Varella Mollick
  • Joao Ricardo Faria

Abstract

This paper studies the effects of capital and labor mobility on real wages across Mexican states for the period 1997-2006. Employing dynamic panel data methods, we find: (1) strong positive effects on real wages from foreign direct investment (FDI) and from migration; (2) domestic and foreign migration provide similar wage effects; and (3) alternative partitions indicate that real wages are more sensitive to FDI-related fluctuations across states with relatively lower wages and migration levels. Overall, these results provide support that real wages respond positively to fluctuations in capital flows and labour movements as predicted from the theory.

Suggested Citation

  • Rene Cabral & Andre Varella Mollick & Joao Ricardo Faria, 2010. "Capital and Labour Mobility and their Impacts on Mexico's Regional Labour Markets," Journal of Development Studies, Taylor & Francis Journals, vol. 46(9), pages 1523-1542.
  • Handle: RePEc:taf:jdevst:v:46:y:2010:i:9:p:1523-1542
    DOI: 10.1080/00220381003599428
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    Cited by:

    1. Rene Cabral Torres, 2012. "Capital and Labor Mobility and the Size of Sub-national Governments: Evidence from a Panel of Mexican States," CID Working Papers 231, Center for International Development at Harvard University.
    2. Maren Michaelsen & John Haisken-DeNew, 2015. "Migration magnet: the role of work experience in rural–urban wage differentials," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-25, December.

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