Abstract

LOPEZ G., Julio; SANCHEZ V., Armando; CONTRERAS-CRISTAN, Alberto  and  CHONG, Miguel. Money wages in Mexico: a tale of two industries. Inv. Econ [online]. 2008, vol.67, n.266, pp.13-36. ISSN 0185-1667.

The aim of this paper is to identify the factors shaping the behavior of money wages in both the manufacturing sector and the maquila industry in Mexico. We study this issue with modern econometric techniques, stressing the use of multivariate econometric models congruent from statistical and theoretical viewpoints. We also introduce a new unit root test to check for the existence of unit roots in the context of a heterogeneous autoregressive process. Our empirical findings show that money wages are jointly determined in both industries, in the sense that they depend on each other; and that a similar set of conditioning variables controls their dynamics. We found that money wages in both sectors depend on the other sector's wage, on underemployment, and on the specific conditions of the sector, the latter summarized by output growth in the manufacturing sector and by productivity growth in the maquila industry.

Keywords : nominal wages; manufacturing industry; maquila industry; cointegration.

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