The effect of trade and FDI on inter-industry wage differentials: The case of Mexico

Arbeitspapier

Taking advantage of the liberalization process under NAFTA, this paper assesses the relative importance of the degree of trade openness and Foreign Direct Investment (FDI) in explaining inter-industry wage differentials for the case of Mexico. Using INEGI's National Survey of Urban Employment for the period 1994-2004, the empirical analysis is conducted on two stages. In the first stage, individual wages are regressed on worker characteristics, job and firm attributes, informality and a set of industry indicators. In the second stage, interindustry wage differentials (derived from the coefficient estimates of the industry indicators) are regressed on trade and FDI variables. The main findings show that trade openness does not have a robust and statistically significant effect on inter-industry wage differentials, whereas for the case of FDI, a positive nonlinear relationship is found to exist.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 2011-10

Classification and Topics

• Classification: Wirtschaft ; Trade and Labor Market Interactions ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity ; Labor Demand ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Subject: Wage Inequality ; Trade Liberalization ; Foreign Direct Investment ; NAFTA ; Handelsliberalisierung ; Direktinvestition ; Freihandelszone ; Lohn ; Industrie ; Lohndifferenzierung ; Mexiko ; NAFTA-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): López Noria, Gabriela
• Event: Veröffentlichung
• (who): Banco de México
• (where): Ciudad de México
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/83715
• Last update: 10.03.2025, 11:45 AM CET