Spatial analysis of manufacturing employment in Mexico, 1984-2013

Abstract

The slow economic growth that characterized the Mexican economy during the 1984-2013 period has had a differential influence on the dynamics of manufacturing employment in the country’s 32 states. We estimate an employment function from census information using a spatial panel technique and show that both the endogenous and exogenous factors of the variables included in the model act as triggers for employment growth in the manufacturing sector. Results confirm that states’ internal factors determine the trajectory of employment growth, but so do the factors of neighboring states, which are analyzed through direct, indirect and total impacts. The estimation of short and long-term impacts allows the improvement of economic policy recommendations regarding employment.