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Trade, FDI, migration, and the place premium: Mexico and the United States
Uppsala University.
Univ Hawaii Manoa, Dept Econ, Honolulu, HI 96822 USA.;Univ Hawaii, Econ Res Org, Honolulu, HI 96822 USA.;IZA, Bonn, Germany..
IZA, Bonn, Germany.;Texas A&M Univ, 1032 Allen Bldg,4220 TAMU, College Stn, TX 77843 USA..ORCID iD: 0000-0002-0989-7673
2017 (English)In: Review of World Economics, ISSN 1610-2878, E-ISSN 1610-2886, Vol. 153, no 1, 1-37 p.Article in journal (Refereed) Published
Abstract [en]

Large wage differences between countries ("place premiums") are well documented. Theory suggests that factor price convergence should follow increased migration, capital flows, and commercial integration. All three have increased between the United States and Mexico over the last 25 years. This paper evaluates the degree of wage convergence between these countries during the period 1988 and 2011. We match survey and census data from Mexico and the United States to estimate the change in wage differentials for observationally identical workers over time. We find very little evidence of convergence. What evidence we do find is most likely due to factors unrelated to US-Mexico integration. While migration, trade, and FDI may reduce the US-Mexico wage differential, these effects are small when compared to the overall wage gap.

Place, publisher, year, edition, pages
2017. Vol. 153, no 1, 1-37 p.
Keyword [en]
Migration, Labor-market integration, Factor price equalization
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:uu:diva-316944DOI: 10.1007/s10290-016-0260-2ISI: 000393033500001OAI: oai:DiVA.org:uu-316944DiVA: diva2:1080467
Available from: 2017-03-10 Created: 2017-03-10 Last updated: 2017-03-10Bibliographically approved

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Citation style
  • apa
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  • modern-language-association-8th-edition
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More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
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  • text
  • asciidoc
  • rtf