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Mexico : human capital effects on wages and productivity

Author

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  • Lopez-Acevedo, Gladys
  • Tinajero, Monica
  • Rubio, Marcela

Abstract

The authors follow the Hellerstein, Neumark, and Troske (1999) framework to estimate marginal productivity differentials and compare them with estimated relative wages. The analysis provides evidence on productivity and nonproductivity-based determinations of wages. Special emphasis is given to the effects of human capital variables, such as education, experience, and training on wages and productivity differentials. Higher education yields higher productivity. However, highly educated workers earn less than their productivity differentials would predict. On average, highly educated workers are unable to fully appropriate their productivity gains of education through wages. On the other hand, workers with more experience are more productive in the same proportion that they earn more in medium and large firms, meaning they are fully compensated for their higher productivity. Finally, workers in micro and small firms are paid more than what their productivity would merit. Training benefits firms and employees since it significantly increases workers'productivity and their earnings.

Suggested Citation

  • Lopez-Acevedo, Gladys & Tinajero, Monica & Rubio, Marcela, 2005. "Mexico : human capital effects on wages and productivity," Policy Research Working Paper Series 3791, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3791
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    References listed on IDEAS

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    Cited by:

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    2. Cristian Bartolucci, 2010. "Understanding the Native-Immigrant Wage Gap Using Matched Employer-Employee Data. Evidence from Germany," Carlo Alberto Notebooks 150, Collegio Carlo Alberto.

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    Keywords

    Primary Education; Economic Theory&Research; Access&Equity in Basic Education; Labor Markets; Tertiary Education;
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