Abstract
This article examines Mexico's (real) wage movements across its 32 subnational entities for post‐North American Free Trade Agreement years. Employing dynamic panel data methods, we obtain the following results. First, education (or labor productivity) has slightly higher wage effects in the Border‐North region. Second, allowing for foreign capital and labor to respond to wages, returns to education have higher effects in South‐Center Mexico, the region with (average) lower education levels. Third, convergence rates become lower with endogenous foreign capital and migration flows: wages move faster in the South‐Center region than in Border‐North. Overall, migration flows have greater effects on wages than foreign direct investment inflows. (JEL F15, F21, F22, F43, O47)
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