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Regional industrial informality and efficiency in Mexico, 1990–2013

Gregory Brock () and Vicente German-Soto ()

Journal of Policy Modeling, 2017, vol. 39, issue 5, 928-941

Abstract: The impact of electricity consumption on aggregate regional Mexican industrial labor productivity is examined using a stochastic production function. Electricity consumption is also used to gauge macroeconomic informality that varies greatly across regions with no geographic advantage in reducing it. Unlike prior research, persistent regional technical inefficiency is found that has little impact on reducing informality but may help reducing corruption. Although electricity consumption contributes positively to industrial labor productivity over time, Mexican industry has yet to transition to a much lower consumption/output ratio found in other countries. Regional policies supporting returns to human capital accumulation being better kept by workers while technical inefficiency is reduced are recommended.

Keywords: Electricity consumption; Informal economy; Corruption; Mexican industry (search for similar items in EconPapers)
JEL-codes: O14 O17 O47 O54 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jpolmo:v:39:y:2017:i:5:p:928-941