Relative prices and wage inequality: Evidence from Mexico

Raymond Robertson

doi:10.1016/j.jinteco.2003.06.003

Relative prices and wage inequality: Evidence from Mexico

Raymond Robertson

Research output: Contribution to journal › Article › peer-review

114 Scopus citations

Abstract

This paper examines the link between relative goods prices and relative wages during two periods of Mexico's trade liberalization. The relative price of skill-intensive goods rose following Mexico's entrance to the General Agreement and Tariffs and Trade (GATT) in 1986, but fell after Mexico entered the North American Free Trade Agreement (NAFTA) in 1994. This paper adds a band pass filter to two established techniques to compare the relationship between prices and wages. Results from all three approaches are consistent with a positive long-run relationship between relative output prices and relative wages. The band pass filter results suggest that the relevant time frame for the relationship begins after 3-5 years.

Original language	English (US)
Pages (from-to)	387-409
Number of pages	23
Journal	Journal of International Economics
Volume	64
Issue number	2
DOIs	https://doi.org/10.1016/j.jinteco.2003.06.003
State	Published - Dec 2004
Externally published	Yes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 1 No Poverty
SDG 8 Decent Work and Economic Growth
SDG 10 Reduced Inequalities
SDG 17 Partnerships for the Goals

Keywords

Mexico
Trade liberalization
Wage inequality

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10.1016/j.jinteco.2003.06.003

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AB - This paper examines the link between relative goods prices and relative wages during two periods of Mexico's trade liberalization. The relative price of skill-intensive goods rose following Mexico's entrance to the General Agreement and Tariffs and Trade (GATT) in 1986, but fell after Mexico entered the North American Free Trade Agreement (NAFTA) in 1994. This paper adds a band pass filter to two established techniques to compare the relationship between prices and wages. Results from all three approaches are consistent with a positive long-run relationship between relative output prices and relative wages. The band pass filter results suggest that the relevant time frame for the relationship begins after 3-5 years.

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KW - Wage inequality

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Relative prices and wage inequality: Evidence from Mexico

Abstract

UN SDGs

Keywords

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