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Early effects of nearshoring in the manufacturing labor market in Mexico

Author

Listed:
  • Erick Rangel
  • Marco A. Esteban Aguirre
  • Irving Llamosas-Rosas

Abstract

We apply the synthetic control method to analyze the initial effects of nearshoring on labor outcomes in Mexico's manufacturing sector from July 2020 to June 2023. Our methodology compares jobs, earnings, and productivity among industry groups more likely to be affected by nearshoring, as identified through a propensity index, with a counterfactual constructed from less likely affected industries. Our results indicate that nearshoring is potentially generating early gains in manufacturing jobs but has not led to improvements in earnings. Furthermore, we do not observe a consistent impact on productivity, although some specifications suggest a modest positive effect in industries with a higher nearshoring propensity. While nearshoring effects may take longer to materialize, our findings highlight its initial implications for the Mexican manufacturing sector.

Suggested Citation

  • Erick Rangel & Marco A. Esteban Aguirre & Irving Llamosas-Rosas, 2025. "Early effects of nearshoring in the manufacturing labor market in Mexico," Working Papers 2025-16, Banco de México.
    • Handle: RePEc:bdm:wpaper:2025-16
    as

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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BA548F0F0-32CF-C65F-F828-40DD71A26C7F%7D.pdf
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    References listed on IDEAS

    as
    1. Hâle Utar & Alfonso Cebreros Zurita & Luis Bernardo Torres Ruiz & Hale Utar, 2023. "The US-China Trade War and the Relocation of Global Value Chains to Mexico," CESifo Working Paper Series 10638, CESifo.
    2. Dmitry Arkhangelsky & Susan Athey & David A. Hirshberg & Guido W. Imbens & Stefan Wager, 2021. "Synthetic Difference-in-Differences," American Economic Review, American Economic Association, vol. 111(12), pages 4088-4118, December.
    3. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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    5. Alberto Abadie & Jérémy L’Hour, 2021. "A Penalized Synthetic Control Estimator for Disaggregated Data," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 116(536), pages 1817-1834, October.
    6. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    7. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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