Employment shifts, economic reform and the changes in public/private sector wages in Mexico: 1987-1997

José A. Pagán (), José A. Tijerina Guajardo () and Jorge Valero-Gil ()
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José A. Pagán: Department of Economics and Finance, College of Business Administration, The University of Texas-Pan American, 1201 W. University Dr., Edinburg, Texas USA 78539
José A. Tijerina Guajardo: Facultad de Economía, Universidad Autónoma de Nuevo León, Loma Redonda 1515-A Pte., Col. Loma Larga, Monterrey, NL, México CP 64710

Empirical Economics, 2002, vol. 27, issue 3, 447-460

Abstract: Over the last decade, the public sector in Mexico experienced substantial fiscal reform, divestiture of public enterprises, and the elimination of many regulations affecting pay and employment. This study analyzes the changes in the public/private sector differences in wages during the 1987-1997 period. The results from analyzing microdata from the Encuesta Nacional de Empleo Urbano show that relative public sector wages increased from 1987 to 1997. Most of the relative wage increase in the public sector can be explained by increases in the price of skills and by changes in sorting across sectors. The results have important public policy implications since they suggest that public sector workers earn more and their wages have grown faster than those of their private sector counterparts. As such, policies contemplating public sector reform should take into account the effect of these measures on the inter-sectoral income distribution and the overall economic growth.

Keywords: Earnings; Public Sector · Wage Structure; Mexico (search for similar items in EconPapers)
JEL-codes: H11 J21 J31 J41 (search for similar items in EconPapers)
Date: 2002-04-26
Note: received: April 2000/Final version received: December 2000
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