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How the wage-education profile got more convex: evidence from Mexico

  • Binelli, Chiara

In the 1990s, in many countries, wages became a more convex function of education: returns to college increased and returns to intermediate education declined. This paper argues that an important cause of this convexification was a two-stage demand-supply interaction: an increased demand for educated workers stimulated a supply response; an increased supply of intermediate-educated workers further increased the demand for college-educated workers, because these two types of labour are complementary. This argument is supported by an empirical equilibrium model of savings and educational choices for Mexico, where the degree of convexification was amplified by loosening credit constraints.

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Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 1404.

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Date of creation: 01 Mar 2014
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Handle: RePEc:stn:sotoec:1404
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  12. Leonardo Gasparini & Sebastián Galiani & Guillermo Cruces & Pablo Acosta, 2012. "Educational Upgrading and Returns to Skills in Latin America. Evidence from a Supply-Demand Framework, 1990-2010," CEDLAS, Working Papers 0127, CEDLAS, Universidad Nacional de La Plata.
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  21. Gabriel Montes Rojas, 2006. "Skill premia in Mexico: demand and supply factors," Applied Economics Letters, Taylor & Francis Journals, vol. 13(14), pages 917-924.
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  24. Carlos Medina & Christian Posso, . "Technical Change and Polarization of the Labor Market: Evidence for Brazil, Colombia and Mexico," Borradores de Economia 614, Banco de la Republica de Colombia.
  25. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
  26. Donald J. Robbins, 1996. "Evidence on Trade and Wages in the Developing World," OECD Development Centre Working Papers 119, OECD Publishing.
  27. Arrau, Patricio & van Wijnbergen, Sweder, 1991. "Intertemporal substitution, risk aversion, and private savings in Mexico," Policy Research Working Paper Series 682, The World Bank.
  28. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 489-530.
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