ASSESSING RETURNS TO EDUCATION AND LABOR SHOCKS IN MEXICAN REGIONS AFTER NAFTA

Andre Mollick () and Rene Cabral ()

Contemporary Economic Policy, 2015, vol. 33, issue 1, 190-206

Abstract: type="main" xml:id="coep12063-abs-0001"> This article examines Mexico's (real) wage movements across its 32 subnational entities for post-North American Free Trade Agreement years. Employing dynamic panel data methods, we obtain the following results. First, education (or labor productivity) has slightly higher wage effects in the Border-North region. Second, allowing for foreign capital and labor to respond to wages, returns to education have higher effects in South-Center Mexico, the region with (average) lower education levels. Third, convergence rates become lower with endogenous foreign capital and migration flows: wages move faster in the South-Center region than in Border-North. Overall, migration flows have greater effects on wages than foreign direct investment inflows. (JEL F15, F21, F22, F43, O47)

Date: 2015
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