Assessing returns to education and labor shocks in Mexican regions after NAFTA Academic Article in Scopus uri icon

abstract

  • © 2014 Western Economic Association International.This article examines Mexico's (real) wage movements across its 32 subnational entities for post-North American Free Trade Agreement years. Employing dynamic panel data methods, we obtain the following results. First, education (or labor productivity) has slightly higher wage effects in the Border-North region. Second, allowing for foreign capital and labor to respond to wages, returns to education have higher effects in South-Center Mexico, the region with (average) lower education levels. Third, convergence rates become lower with endogenous foreign capital and migration flows: wages move faster in the South-Center region than in Border-North. Overall, migration flows have greater effects on wages than foreign direct investment inflows. (JEL F15, F21, F22, F43, O47)

publication date

  • January 1, 2015