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The Rise of the Skill Premium in Mexican Maquiladoras

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  • Andre Varella Mollick

Abstract

The wage premium between skilled and unskilled workers in Mexican maquiladoras has moved up, from 4.14 in January 1990 to 4.79 in March 2006. This 16 per cent increase in wage differentials favouring skilled workers is contrasted to a measure of relative labour supplies within a model of skill-biased technical change (SBTC). Estimating how this skill premium responds to technology (captured by either a time trend or the capital-expenditure share) and to relative labour supplies, we find support for theoretical models in which the skill premium increases in the long-run under strong technology effects. Error correction models confirm fast adjustment to long-run equilibrium, within about four months.

Suggested Citation

  • Andre Varella Mollick, 2008. "The Rise of the Skill Premium in Mexican Maquiladoras," Journal of Development Studies, Taylor & Francis Journals, vol. 44(9), pages 1382-1404.
    • Handle: RePEc:taf:jdevst:v:44:y:2008:i:9:p:1382-1404
    DOI: 10.1080/00220380802265272
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    2. André Mollick, 2011. "The world elasticity of labor substitution across education levels," Empirical Economics, Springer, vol. 41(3), pages 769-785, December.
    3. Mr. Alberto Behar, 2023. "The Elasticity of Substitution Between Skilled and Unskilled Labor in Developing Countries: A Directed Technical Change Perspective," IMF Working Papers 2023/165, International Monetary Fund.
    4. Havranek, Tomas & Irsova, Zuzana & Laslopova, Lubica & Zeynalova, Olesia, 2020. "Skilled and Unskilled Labor Are Less Substitutable than Commonly Thought," EconStor Preprints 223060, ZBW - Leibniz Information Centre for Economics.
    5. Mollick, André Varella, 2009. "Employment Responses of Skilled and Unskilled Workers at Mexican Maquiladoras: The Effects of External Factors," World Development, Elsevier, vol. 37(7), pages 1285-1296, July.
    6. Mehta, Aashish & Mohr, Belinda Acuña, 2012. "Economic Liberalization and Rising College Premiums in Mexico: A Reinterpretation," World Development, Elsevier, vol. 40(9), pages 1908-1920.

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