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Intersectoral Wage Differentials and the Change of the Composition of Urban Employment in Mexico during 2001-2004

Carlo Alcaraz Pribaz (), Daniel Chiquiar () and Manuel Ramos-Francia

No 2008-06, Working Papers from Banco de México

Abstract: We estimate wage differentials across different sectors of the Mexican economy. The results suggest that the wage differential between the formal and informal sectors is significant and larger than the differential between industry and services. The findings suggest that significant differences in productivity levels between the formal and informal sectors could exist. This, in turn, might imply that the economy's aggregate productivity could be affected by the increase of the share of informal employment. The results also suggest that the main distortions in the Mexican labor market seem to be related more with labor regulations that affect the allocation of resources between formal and informal activities, than a result of intrinsic characteristics of the production processes in the industrial and service sectors.

Keywords: Informal Sector; Productivity; Labor Market Distortions (search for similar items in EconPapers)
JEL-codes: J24 J31 O17 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-eff and nep-lab
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