Globalization and Wage Convergence: Mexico and the United States

Davide Gandolfi (), Timothy Halliday and Raymond Robertson
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Davide Gandolfi: Macalester College, Minnesota

No 8254, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Neoclassical trade theory suggests that factor price convergence should follow increased commercial integration. Rising commercial integration and foreign direct investment followed the 1994 North American Free Trade Agreement between the United States and Mexico. This paper evaluates the degree of wage convergence between Mexico and the United States between 1988 and 2011. We apply a synthetic panel approach to employment survey data and a more descriptive approach to Census data from Mexico and the US. First, we find no evidence of long-run wage convergence among cohorts characterized by low migration propensities although this was, in part, due to large macroeconomic shocks. On the other hand, we do find some evidence of convergence for workers with high migration propensities. Finally, we find evidence of convergence in the border of Mexico vis-à-vis its interior in the 1990s but this was reversed in the 2000s.

Keywords: migration; labor-market integration; factor price equalization (search for similar items in EconPapers)
JEL-codes: F15 F16 F22 J31 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-06
New Economics Papers: this item is included in nep-int, nep-lab and nep-mig
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Citations: View citations in EconPapers (1)

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Working Paper: Globalization and Wage Convergence: Mexico and the United States (2014)
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