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Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing

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  • Revenga, Ana

Abstract

This article analyzes the effect of trade liberalization on employment and wages in the Mexican manufacturing sector. The study documents that many of the rents generated by trade protection were absorbed by workers in the form of a wage premium. Trade liberalization affected firm-level employment and wages by shifting down industry product and labor demand. This in itself may have accounted for a 3-4 percent decline in real wages on average. But trade reform also reduced the rents available to be captured by firms and workers. This had an additional negative effect on firm-level employment and wages. Copyright 1997 by University of Chicago Press.

Suggested Citation

  • 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 20-43, July.
  • Handle: RePEc:ucp:jlabec:v:15:y:1997:i:3:p:s20-43
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    References listed on IDEAS

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    5. Finis Welch, 1969. "Linear Synthesis of Skill Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 4(3), pages 311-327.
    6. Sherwin Rosen, 2005. "Substitution And Division Of Labour," World Scientific Book Chapters,in: An Inframarginal Approach To Trade Theory, chapter 3, pages 29-51 World Scientific Publishing Co. Pte. Ltd..
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