Trade, Migration, and the Place Premium: Mexico and the United States - Working Paper 396

Davide Gandolfi
Authors registered in the RePEc Author Service: Timothy J. Halliday

No 396, Working Papers from Center for Global Development

Abstract: TLarge wage differences between countries (“place premiums”) are well documented. Theory suggests that factor price convergence should follow increased migration, capital flows, and commercial integration. All three have characterized the relationship between the United States and Mexico over the last 25 years. This paper evaluates the degree of wage convergence between these countries during the period 1988 and 2011. We match survey and census data from Mexico and the United States to estimate the change in wage differentials for observationally identical workers over time. We find very little evidence of convergence. What evidence we do find is most likely due to factors unrelated to US-Mexico integration. While migration and trade liberalization may reduce the US-Mexico wage differential, these effects are small when compared to the overall wage gap.

Keywords: Migration; Labor-market Integration; Factor Price Equalization (search for similar items in EconPapers)
JEL-codes: F15 F16 F22 J31 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-03
New Economics Papers: this item is included in nep-int and nep-mig
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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