Popli, Gurleen (2006): The rising wage inequality in Mexico, 1984-2000: A distributional analysis. Forthcoming in: Journal of Income Distribution
Download (414kB) | Preview
In this paper we look at the distribution of wages to examine the extent and cause of the increasing wage inequality in Mexico over the last two decades (1984 to 2000). To understand the causes of the increase in inequality over time we do a counterfactual analysis. We find that over the last two decades not only did the inequality increase, there also was an erosion of real wages, and it's the middle class which was affected the most. Main reason for the decrease in real wages was the declining unionization in the country. While the main reason for the rise in inequality was the changing distribution of skills.
|Item Type:||MPRA Paper|
|Original Title:||The rising wage inequality in Mexico, 1984-2000: A distributional analysis|
|Keywords:||kernel density estimation; counterfactual distribution ; unions; trade liberalization; changing distribution of skills|
|Subjects:||C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C14 - Semiparametric and Nonparametric Methods: General
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials
|Depositing User:||Gurleen Popli|
|Date Deposited:||11. Oct 2006|
|Last Modified:||13. Feb 2013 07:29|
Airola, Jim and Juhn, Chinhui, 2005. "Wage Inequality in Post-Reform Mexico." IZA Discussion Paper No. 1525. Banco de Mexico, Annual Report, 1996 and 2001. Bluestone, Barry, and Bennett Harrison, 1988. "The Growth of Low-Wage Employment: 1963-86." American Economic Review, vol. 78, pp. 124-128. Bradbury, Katharine, 1986. "The Shrinking Middle Class." New England Economic Review (September/October). Cameron, L. A., 2000. "Poverty and Inequality in Java: Examining the Impact of the Changing Age, Educational and Industrial Structure." Journal of Development Economics, vol. 62, pp. 149-180. Card, D., 1996. "The Effects of Unions on the Structure of Wages: A Longitudinal Analysis." Econometrica, vol. 64, pp. 957-979. Cortez, Willy W., 2001. "What is Behind Increasing Wage Inequality in Mexico?" World Development, vol. 29, pp. 1905-1922. Cragg, Michael, and Mario Epelbaum, 1996. "Why has Wage Dispersion grown in Mexico? Is it the Incidence of Reforms or the Growing Demand for Skill?" Journal of Development Economics, vol. 51, pp. 99-116. Davis, Joe C., and John H. Huston, 1992. "The Shrinking Middle-Income Class: A Multivariate Analysis." Eastern Economic Journal, vol. 18, pp. 277-285. DiNardo, John, Nicole M. Fortin, and Thomas Lemieux, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach." Econometrica, vol. 64, pp. 1001-1044. ENIGH, Encuesta National de Ingresos y Gastos de los Hogares, Mexico City: INEGI. 1984, 1989, 1992, 1994, 1996, 1998, 2000. Esquivel, Gerardo, and Jose Antonio Rodriguez-Lopez, 2003. "Technology, Trade and Wage Inequality in Mexico before and after NAFTA." Journal of Development Economics, vol. 72, pp. 543-565. Fairris, David, 2003. "Unions and Wage Inequality in Mexico." Industrial and Labor Relations Review, vol. 56, pp. 481-497. Fairris, David, 2005. "What do Unions do in Mexico." Working Paper, University of California, Riverside. Fairris, David, Gurleen Popli, and Eduardo Zepeda, 2005. "Minimum Wages and the Wage Structure in Mexico." Working Paper, University of California, Riverside. Feenstra, Robert C., and Gordon H. Hanson, 1997. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras." Journal of International Economics, vol. 42, pp. 371-393. Feliciano, Zadia M., 2001. "Workers and Trade Liberalization: The Impact of Trade Reforms in Mexico on Wages and Employment." Industrial and Labor Relations Review, vol. 55, pp. 95-115. Fields, Gary, 2002. "Accounting for Income Inequality and its Change: A New Method, with Application to the Distribution of Earnings in the United States," Working Paper, Cornell University. Freeman, R. B. and J. L. Medoff, 1984. What do Unions Do? New York: Basic Books. Gonzalez, D.A. and T.McKinley, 1997. "The Paradox of Narrowing Wage Differentials and Widening Wage Inequality in Mexico." Development and Change, vol. 28, pp. 505-530. Hanson, Gordon H., 2003. "What has happened to Wages in Mexico since NAFTA? Implication for Hemispheric Free Trade." Working Paper # 9563, NBER. Hanson, Gordon H., and Ann Harrison, 1999. "Trade Liberalization and Wage Inequality in Mexico." Industrial and Labor Relations Review, vol. 52, pp. 271-288. Jenkins, Stephen, 1995. "Did the Middle Class Shrink during the 1980s? UK Kernel Density Estimates." Economic Letters, vol. 49, pp. 407-413. Jenkins, Stephen, and Philippe van Kerm, 2005. "Accounting for Income Distribution Trends: A Density Function Decomposition Approach." Journal of Economic Inequality, vol. 3, pp. 43-61. Juhn, Chinhui, Kevin M. Murphy, and Brooks Pierce, 1993. "Wage Inequality and the Rise in Returns to Skill." Journal of Political Economy, vol. 101, pp. 410-442. Lederman, Daniel, William F. Maloney and Luis Serven, 2003. "Lessons from NAFTA for Latin American and the Caribbean Countries: A Summary of Research Findings." World Bank. Lemieux, Thomas, 2002. "Decomposing Changes in Wage Distributions: A Unified Approach." Canadian Journal of Economics, vol. 35, pp. 646-688. Lewis, H. G., 1986. Union Relative Wage Effects: A Survey. Chicago, University of Chicago Press. Litchfield, Julie A., 1999. "Inequality: Methods and Tools." Text for the World Bank PovertyNet website: http://www.worldbank.org/poverty. Lustig, Nora, 1998. Mexico: The Remaking of an Economy, Second Edition (Brookings Institution Press, Washington DC). Lustig, Nora, 2001. "Life is not Easy: Mexico's Quest for Stability and Growth." Journal of Economic Perspectives, vol. 15, pp. 85-106. Maloney, W., and Jairo Nunez, 2001. "Measuring the Impact of Minimum Wage: Evidence from Latin America." Working Paper, World Bank. McKenzie, David and Christopher Woodruff, 2003. "Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises." BREAD Working Paper #020, Februrary. Murphy, Kevin M., and Finis Welch, 1993. "Industrial Change and the Rising Importance of Skills." In Sheldon Danzinger and Peter Gorrschalk (eds), Uneven Tides: Rising Inequality in America, (Russell Sage Foundation, New York). Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets." International Economic Review, vol. 14, pp. 693-709. Pagan, Adrian, and Aman Ullah, 1999. Nonparametric Econometrics (Cambridge University Press). Panagides, Alexix, and Harry Anthony Patrines, 1994. "Union-Non-union Wage Differentials in the Developing World: A Case Study of Mexico." Policy Research Working Paper # 1269, World Bank. Revenga, Ana, 1997. "Employment and Wage Effects of Trade Liberalization: The Case of Mexican Manufacturing." Journal of Labor Economics, vol. 15, pp. S20-S43. Robinson, Sherman, 1976. "A Note on the U-Hypothesis Relating Income Inequality and Economic Development." American Economic Review, vol. 66, pp. 437-440. Shorrocks, Anthony, 1982. "Inequality Decomposition by Factor Components." Econometrica, vol. 50, pp. 193-211. Silverman, B.W., 1986. Density estimation for Statistics and Data Analysis (New York, Chapman and Hall). Valletta, Robert G., 1997. "The Effects of Industry Employment Shifts on the U.S. Wage Structure, 1979-1995." Economic Review, Federal Reserve Bank of San Francisco (1), pp. 16-32.