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Why Has Wage Dispersion Grown in Mexico? Is It the Incidence of Reforms of Growing Demand for Skills?

Michael Cragg; Mario Epeaum

Title:
Why Has Wage Dispersion Grown in Mexico? Is It the Incidence of Reforms of Growing Demand for Skills?
Author(s):
Cragg, Michael
Epeaum, Mario
Date:
Type:
Working papers
Department:
Economics
Persistent URL:
Series:
Department of Economics Discussion Papers
Part Number:
740
Publisher:
Department of Economics, Columbia University
Publisher Location:
New York
Abstract:
In the mid 1980s, Mexico undertook major trade reform, privatization and deregulation. This coincided with a rapid expansion in wages and employment that led to a rise in wage dispersion. This paper examines the role of industry and occupation-specific effects in explaining the growing dispersion. We find that despite the magnitude and pace of the reforms, industry-specific effects explain little of the rising wage dispersion. In contrast occupation-specific effects can explain almost half of the growing wage dispersion. Finally, we find that the economy became more skill-intensive and that this effect was larger for the traded sector because this sector experienced much smaller low-skilled employment growth. We therefore suggest that competition from imports had an important role in the fall of the relative demand for less-skilled workers.
Subject(s):
Economics, Labor
Item views
236
Metadata:
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Suggested Citation:
Michael Cragg, Mario Epeaum, 1995, Why Has Wage Dispersion Grown in Mexico? Is It the Incidence of Reforms of Growing Demand for Skills?, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:15633.

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