Wage Inequality in Post-Reform Mexico
Jim Airola () and
Chinhui Juhn ()
No 1525, IZA Discussion Papers from Institute of Labor Economics (IZA)
Using the Mexican Household Income and Expenditure Survey (ENIGH) covering 1984-2000 we analyze wages and employment in Mexico after trade liberalization and domestic reforms. We find that wage inequality and returns to post-secondary schooling increased rapidly during 1984-1994 but stabilized since that period. The end of inequality growth was due to a severe macroeconomic crisis which adversely impacted the better educated, an increase in education levels at the end of the 1990s, and a slowdown in skill demand in the latter half of the 1990s. Between-industry shifts, consistent with trade-based explanations, account for a part of the increase in skill demand during 1984-1994, but these types of movements actually reduced the demand for skill in the latter part of the 1990s. The equalizing impact of trade was offset by within-industry demand shifts which continued to favor more educated workers. The Mexican experience in the 1990s suggests that market-oriented reforms have a sharp initial impact on inequality which dissipates over time. However, the opening of the economy to trade, foreign capital, and global markets also leads to a more long-run increase in the demand for skill.
Keywords: wage inequality; reforms; skill demand (search for similar items in EconPapers)
JEL-codes: J31 (search for similar items in EconPapers)
Pages: 50 pages
New Economics Papers: this item is included in nep-edu, nep-lab and nep-lam
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Journal Article: Wage Inequality in Post-Reform Mexico (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp1525
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