Mexico

Description

"The authors follow the Hellerstein, Neumark, and Troske (1999) framework to estimate marginal productivity differentials and compare them with estimated relative wages. The analysis provides evidence on productivity and nonproductivity-based determinations of wages. Special emphasis is given to the effects of human capital variables, such as education, experience, and training on wages and productivity differentials. Higher education yields higher productivity. However, highly educated workers earn less than their productivity differentials would predict. On average, highly educated workers are unable to fully appropriate their productivity gains of education through wages. On the other hand, workers with more experience are more productive in the same proportion that they earn more in medium and large firms, meaning they are fully compensated for their higher productivity. Finally, workers in micro and small firms are paid more than what their productivity would merit. Training benefits firms and employees since it significantly increases workers' productivity and their earnings. "--World Bank web site.

Description

"Mexico experienced a pronounced increase in the degree of inequality and earnings inequality over the 1980s and mid 1990s. Contrary to the trend in the distribution of total income inequality, there has been an improvement in the distribution of earnings inequality since 1996. This paper shows the following results. First, education has the highest gross contribution in explaining changes in earnings distribution. Second, both changes in the distribution of education and in the relative earnings among educational groups have always been in phase with the alterations in the earnings distribution. Specifically, when the income profile effect related to education became steeper and the inequality of education increased, the earnings distribution worsened (as in the 1988-96 period). Third, changes in the relative earnings among educational groups are always the leading force behind changes in inequality. "--World Bank web site.

Subjects

Series Statement

• Policy research working paper -- 3919
• Policy research working papers (Online) -- 3919.

Links

• External source

Other Editions

• Mexico: two decades of the evolution of education and inequalityElectronic resourceWorld Bank2006-01-01
• MexicoElectronic resourceHuman Development Division, World Bank Institute2003-01-01
• MexicoElectronic resourceWorld Bank2005-01-01
• MexicoElectronic resourceWorld Bank2006-01-01