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Globalization, Labor Income, and Poverty in Mexico

In: Globalization and Poverty

  • Gordon H. Hanson

In this paper, I examine changes in the distribution of labor income across regions of Mexico during the country's decade of globalization in the 1990's. I focus the analysis on men born in states with either high-exposure or low-exposure to globalization, as measured by the share of foreign direct investment, imports, or export assembly in state GDP. Controlling for regional differences in the distribution of observable characteristics and for initial differences in regional incomes, the distribution of labor income in high-exposure states shifted to the right relative to the distribution of income in low-exposure states. This change was primarily the result of a shift in mass in the income distribution for low-exposure states from upper-middle income earners to lower income earners. Labor income in low-exposure states fell relative to high-exposure states by 10% and the incidence of wage poverty (the fraction of wage earners whose labor income would not sustain a family of four at above-poverty consumption levels) in low-exposure states increased relative to high-exposure states by 7%.

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This chapter was published in:
  • Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, December.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 0107.
    Handle: RePEc:nbr:nberch:0107
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. Susan Athey & Guido W. Imbens, 2002. "Identification and Inference in Nonlinear Difference-In-Differences Models," NBER Technical Working Papers 0280, National Bureau of Economic Research, Inc.
    2. Chiquiar, Daniel, 2005. "Why Mexico's regional income convergence broke down," Journal of Development Economics, Elsevier, vol. 77(1), pages 257-275, June.
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    4. Hanson, G.H. & Harrison, A., 1995. "Trade, Technology and Wage Inequality," Papers 95-20, Columbia - Graduate School of Business.
    5. repec:rus:hseeco:121565 is not listed on IDEAS
    6. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
    7. 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 S20-43, July.
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    9. Murray Leibbrandt & James Levinsohn & Justin McCrary, 2005. "Incomes in South Africa since the fall of Apartheid," Working Papers 536, Research Seminar in International Economics, University of Michigan.
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