Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico

  • Chiquiar D
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Abstract

In this paper, I study what factors determined the changes in Mexico's regional wage differentials during the nineties. I exploit the regional variation in exposure to international markets to identify the effects of NAFTA on wages and the skill premium. The results support the presence of Stolper-Samuelson type of responses during Mexico's trade liberalization: regions more exposed to globalization appear to have exhibited an increase in overall wage levels, but a decrease in the skill premium, relative to other regions of the country. The results suggest that trade liberalization has a spatial dimension that is usually neglected in traditional models. © 2007 Elsevier B.V. All rights reserved.

Author-supplied keywords

  • Economic geography
  • NAFTA
  • Stolper-Samuelson Theorem
  • Trade liberalization
  • Wage differentials

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Authors

  • Daniel Chiquiar

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