Economic Liberalization and Rising College Premiums in Mexico: A Reinterpretation

Aashish Mehta and Belinda Acuña Mohr

World Development, 2012, vol. 40, issue 9, 1908-1920

Abstract: Mexico’s college premium rose in the 1990s. Studies employing structural decomposition analyses treat the college premium as the relative price of “skilled” to “unskilled” workers. They find that reallocations of labor across industries and occupations cannot account for rising college premiums, and often attribute them to widely observed trade-induced increases in skills demand within the manufacturing sector. In contrast, using a reduced-form decomposition that moves beyond a binary definition of skill and allows for inter-occupation wage differentials, we show that employment shifts across occupations and industries can account for the increase in the college premium. We link the rising premium, and differences in its trajectory by gender and cohort, to the growth of specific professions that produce services, not manufactured goods.

Keywords: skill premium; employment composition; trade liberalization; services; Latin America; Mexico (search for similar items in EconPapers)
JEL-codes: F16 J21 O15 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:40:y:2012:i:9:p:1908-1920

DOI: 10.1016/j.worlddev.2012.04.007

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