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Changes in Human Capital and Wage Inequality in Mexico

  • Gurleen K. Popli


    (Department of Economics, The University of Sheffield)

Over the last two decades Mexico has witnessed a significant increase in wage inequality, typically attributed to the increase in relative demand for skilled labor. Over this period the educational achievements and their distribution across the labor force have also changed substantially. In this paper we analyze the impact of changes in human capital on wage inequality in Mexico. We focus our analysis on decomposing (1) the level of inequality in any given year and (2) change in inequality over time, into observable (e.g. age, education, occupation, etc.) and unobservable differences across workers. The main findings of this paper are: unobservable factors (within group inequality) account for most of the inequality in any given year. Among the observable factors human capital emerges as the most important variables in explaining the level of, and changes in, inequality.

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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2007001.

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Length: 19 pages
Date of creation: Jan 2007
Date of revision: Jan 2007
Handle: RePEc:shf:wpaper:2007001
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