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Migration Magnet: The Role of Work Experience in Rural-Urban Wage Diff erentials in Mexico

  • John P. Haisken-DeNew
  • Maren M. Michaelsen

    ()

This study estimates separate selectivity bias corrected wage equations for formal and informal workers in rural and urban Mexico using data from the Mexican Family Life Survey (MxFLS). We control for diff erent potential selection patterns using Probit and Multinominal logit models in the fi rst step in which health, personality traits and family characteristics serve as exclusion restrictions for working per se and working in the formal sector. Oaxaca-Blinder Decompositions show that rural-urban wage inequality in the formal and informal sector is determined by diff erences in observable human capital. In the informal sector, the wage diff erential is mainly explained by diff erences in returns to experience. Furthermore, we analyse rural-to-urban migrants‘ labour market performance. The fi ndings suggest that rural-to-urban migration will continue and the informal sector will further increase.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0263.

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Length: 36 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:rwi:repape:0263
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  1. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-42, April.
  2. Bosch, Mariano & Maloney, William F., 2007. "Gross Worker Flows in the Presence of Informal Labor Markets: Evidence from Mexico, 1987-2002," IZA Discussion Papers 2864, Institute for the Study of Labor (IZA).
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  4. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
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  8. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
  9. repec:dgr:kubcen:200046 is not listed on IDEAS
  10. Marcouiller, Douglas & Ruiz de Castilla, Veronica & Woodruff, Christopher, 1997. "Formal Measures of the Informal-Sector Wage Gap in Mexico, El Salvador, and Peru," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 367-92, January.
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  12. Bosch, Mariano & Maloney, William, 2008. "Cyclical movements in unemployment and informality in developing countries," Policy Research Working Paper Series 4648, The World Bank.
  13. Gordon H. Hanson, 2010. "Why Isn't Mexico Rich?," NBER Working Papers 16470, National Bureau of Economic Research, Inc.
  14. Boucher, Steve & Stark, Oded & Taylor, J. Edward, 2005. "A Gain with a Drain? Evidence from Rural Mexico on the New Economics of the Brain Drain," Working Papers 190907, University of California, Davis, Department of Agricultural and Resource Economics.
  15. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2008. "Is There an Informal Employment Wage Penalty? Evidence from South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 683-710.
  16. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 477-506.
  17. Stark, Oded & Taylor, J Edward, 1991. "Migration Incentives, Migration Types: The Role of Relative Deprivation," Economic Journal, Royal Economic Society, vol. 101(408), pages 1163-78, September.
  18. Arias, Javier & Azuara, Oliver & Bernal, Pedro & Heckman, James & Villarreal, Cajeme, 2010. "Policies to Promote Growth and Economic Efficiency in Mexico," MPRA Paper 20414, University Library of Munich, Germany.
  19. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
  20. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
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