Place-specific determinants of income gaps: New sub-national evidence from Mexico

Ricardo Hausmann, Carlo Pietrobelli and Miguel Santos ()

Journal of Business Research, 2021, vol. 131, issue C, 782-792

Abstract: The literature on wage gaps between Chiapas and the rest of Mexico revolves around individual factors, such as education and ethnicity. Yet, twenty years after the Zapatista rebellion, the schooling gap has shrunk while the wage gap has widened, and we find no evidence indicating that Chiapas indigenes are worse-off than their likes elsewhere in Mexico. We explore a different hypothesis and argue that place-specific characteristics condition the choices and behaviors of individuals living in Chiapas and explain persisting income gaps. Most importantly, they limit the necessary investments at the firm level in dynamic capabilities. Based on census data, we calculate the economic complexity index, a measure of the knowledge agglomeration embedded in the economic activities at the municipal level. Economic complexity explains a larger fraction of the wage gap than any individual factor. Our results suggest that the problem is Chiapas, and not Chiapanecos.

Keywords: Economic complexity; Wage gaps; Development policy; Dynamic capabilities; Mexico (search for similar items in EconPapers)
JEL-codes: A11 B41 O10 O12 O20 R00 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:131:y:2021:i:c:p:782-792

DOI: 10.1016/j.jbusres.2021.01.003

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