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Effect of NAFTA on Mexico's Income Distribution in the Presence of Migration

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  • Garduno-Rivera, Rafael

Abstract

This paper asks how NAFTA affected income distribution within Mexico considering changes in internal migration. Trade liberalization should theoretically increase the income of low-skilled workers in low-skilled labor-abundant developing countries. Thus, by increasing the wages of poorer workers, one might expect that trade will decrease income disparity. However, anecdotal evidence indicates that NAFTA increased the gap between rich and poor in Mexico. Understanding the distributional effects of NAFTA on regional income is particularly important in countries with high levels of geographic inequality, such as Mexico. Because trade may affect wages differently across regions within the country, accurate trade welfare measures must incorporate intra-national migration. Using household level data before and after NAFTA, I find geographic, gender and educational inequalities in the distribution of Mexican income post NAFTA.

Suggested Citation

  • Garduno-Rivera, Rafael, 2010. "Effect of NAFTA on Mexico's Income Distribution in the Presence of Migration," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61895, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61895
    DOI: 10.22004/ag.econ.61895
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    References listed on IDEAS

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    Cited by:

    1. Raymundo M. Campos-Vázquez & Nora Lustig, 2017. "Labour income inequality in Mexico: Puzzles solved and unsolved," WIDER Working Paper Series wp-2017-186, World Institute for Development Economic Research (UNU-WIDER).
    2. Raymundo M. Campos-Vazquez & Nora Lustig, 2017. "Labour income inequality in Mexico: Puzzles solved and unsolved," Working Papers 1719, Tulane University, Department of Economics.

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