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Effect of NAFTA on Mexico´s wage inequality

Author

Listed:
  • Martha Rodriguez-Villalobos

    (Universidad de Monterrey)

  • Antonio Julián-Arias

    (Universidad de Monterrey)

  • Alejandro Cruz-Montaño

    (Universidad de Monterrey)

Abstract

One of the benefits that the signing of the North American Free Trade Agreement (NAFTA) would bring to the country was the reduction of large differences in wages as a result of the increase in productivity. The present study measures the effect of demographic, labor, and sector variables on Mexico?s wage inequality during the period 1988 to 2017, as well as the impact that the incorporation to NAFTA has had. Through a fixed effects model, it was found that the increase in the proportion of people working in the service and agricultural sectors increased the wage gap, as well as the people who occupy managerial positions, since they obtained a relative salary higher than the average. Despite the expected results of NAFTA, this economic trade integration increased the wage differential in Mexico and these levels are invariant over time, giving way to proposals to change the minimum wage.

Suggested Citation

  • Martha Rodriguez-Villalobos & Antonio Julián-Arias & Alejandro Cruz-Montaño, 2019. "Effect of NAFTA on Mexico´s wage inequality," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 8(1), pages 131-149, June.
    • Handle: RePEc:sek:jijoes:v:8:y:2019:i:1:p:131-149
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    References listed on IDEAS

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    Cited by:

    1. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.

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    More about this item

    Keywords

    wage inequality; income distribution; occupational analysis; sectorial analysis; NAFTA; fixed effects;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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