Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83715
Authors: 
López Noria, Gabriela
Year of Publication: 
2011
Series/Report no.: 
Working Papers, Banco de México 2011-10
Abstract: 
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.
Subjects: 
Wage Inequality
Trade Liberalization
Foreign Direct Investment
NAFTA
JEL: 
F16
G31
J23
M52
Document Type: 
Working Paper
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