Study: US-Mexico Trade Boom Has Barely Dented Wage Gap
A major new analysis of 23 years of wage data reveals that despite surging migration, investment, and commerce between the US and Mexico, workers in both countries have seen almost no wage convergence. The finding challenges assumptions about how economic integration lifts developing economies and complicates the case for further liberalization.
Originaltitel: Trade, FDI, Migration, and the Place Premium: Mexico and the United States
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.