Economic Segmentation and Worker Earnings in a U.S.-Mexico Border Enclave

Abstract

This study examines the effects of economic segmentation on worker earnings in El Paso, Texas, a city that is a major enclave on the U.S.-Mexico border. The investigation relies on the dual economy model, which maintains that the U.S. economy is divided into a monopoly and a competitive sector. This distinction is thought to be related to worker remuneration, with poorly paying jobs found primarily in the competitive sector. It is hypothesized that females and minority males are disproportionately located in the competitive sector and, therefore, that their income is negatively influenced. These hypotheses were tested using the 1980 U.S. Census Public Use Microdata file for the El Paso SMSA. In contrast to the dominant hypothesis this research found that women, particularly those of Mexican origin, were disproportionately located in the monopoly sector. However, women gained considerably less by virtue of monopoly sector employment than did males, especially those of Anglo origin. Generally the findings are consistent with the possibility that large monopoly sector firms strategically locate labor-intensive divisions in El Paso (and similar areas) because of the large supply of unskilled minority labor.