Working Paper: NBER ID: w11027
Authors: Gordon H. Hanson
Abstract: In this paper, I examine changes in the distribution of labor income across regions of Mexico during the country's decade of globalization in the 1990's. I focus the analysis on men born in states with either high-exposure or low-exposure to globalization, as measured by the share of foreign direct investment, imports, or export assembly in state GDP. Controlling for regional differences in the distribution of observable characteristics and for initial differences in regional incomes, the distribution of labor income in high-exposure states shifted to the right relative to the distribution of income in low-exposure states. This change was primarily the result of a shift in mass in the income distribution for low-exposure states from upper-middle income earners to lower income earners. Labor income in low-exposure states fell relative to high-exposure states by 10% and the incidence of wage poverty (the fraction of wage earners whose labor income would not sustain a family of four at above-poverty consumption levels) in low-exposure states increased relative to high-exposure states by 7%.
Keywords: No keywords provided
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| peso crisis (F31) | labor income (J39) |
| other economic shocks (F69) | labor income (J39) |
| globalization exposure (F69) | labor income distribution (E25) |
| high-exposure states (H75) | average labor earnings (J31) |
| low-exposure states (H75) | labor income (J39) |
| low-exposure states (H75) | income share of upper-middle-income earners (D33) |
| low-exposure states (H76) | wage poverty incidence (J31) |