Abstract

The liberalization process in Mexico, which intensified with the North American Free Trade Agreement in 1994, brought changes in the structure of labor markets due to labor flexibilization. With information from the National Institute of Statistics and Geography and the Secretariat of Labor and Social Welfare, a spatial model of autoregressive vectors is estimated to analyze the impact that labor flexibility has had on real wages and productivity in the 32 states of Mexico. The model verifies that there is causality, in the Granger tests, between labor flexibility and wages, though the generalized impulses prove that this impact is negative in the majority of the 32 states. Evidence is presented that past labor flexibility, average labor productivity, and wages positively influence their future behavior; in addition to the fact that the wage increase of a particular state positively affects its neighbors (push-out effect) and, that this state is affected when an increase in real wage occurs in its neighbors (push-in effect).

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