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Changes in Human Capital and Wage Inequality in Mexico

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  • Gurleen K. Popli

Abstract

Over the last two decades, Mexico has witnessed a significant increase in wage inequality, typically attributed to the increase in relative demand for skilled labour. Over this period, educational achievements and their distribution across the labour force have also changed substantially. In this paper, the impact of changes in human capital on wage inequality in Mexico is analysed. The analysis focuses on decomposing the level of inequality in any given year and the change in inequality over time into observable (e.g. age, education, etc.) and unobservable differences across workers. The main findings of this paper are that unobservable factors account for most of the inequality in any given year; among the observable factors, human capital emerges as the most important variable explaining the level of inequality in any given year, and, further, it is the changes in human capital, specifically the returns to education, that are mainly responsible for the observed changes in inequality.

Suggested Citation

  • Gurleen K. Popli, 2011. "Changes in Human Capital and Wage Inequality in Mexico," Oxford Development Studies, Taylor & Francis Journals, vol. 39(3), pages 369-387, February.
    • Handle: RePEc:taf:oxdevs:v:39:y:2011:i:3:p:369-387
    DOI: 10.1080/13600818.2011.596276
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    1. Raymundo M. Campos-Vázquez & Nora Lustig, 2017. "Labour income inequality in Mexico: Puzzles solved and unsolved," WIDER Working Paper Series wp-2017-186, World Institute for Development Economic Research (UNU-WIDER).
    2. Raymundo M. Campos-Vázquez & Nora Lustig & John Scott, 2018. "Inequality in Mexico: Labour markets and fiscal redistribution 1989-2014," WIDER Working Paper Series wp-2018-188, World Institute for Development Economic Research (UNU-WIDER).
    3. Raymundo M. Campos-Vázquez, 2013. "Why did wage inequality decrease in Mexico after NAFTA?," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(2), pages 245-278, July-Dece.
    4. Raymundo Campos-Vázquez & Nora Lustig & John Scott, 2018. "Inequality in Mexico: Labour markets and fiscal redistribution 1989–2014," WIDER Working Paper Series 188, World Institute for Development Economic Research (UNU-WIDER).
    5. Claudia Tello & Raul Ramos & Manuel Artís, 2012. "“Changes in Wage Structure in Mexico Going Beyond the Mean: An Analysis of Differences in Distribution, 1987-2008”," AQR Working Papers 201211, University of Barcelona, Regional Quantitative Analysis Group, revised Mar 2013.
    6. Raymundo M. Campos-Vazquez & Nora Lustig, 2017. "Labour income inequality in Mexico: Puzzles solved and unsolved," Working Papers 1719, Tulane University, Department of Economics.

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