Abstract
This paper reports empirical evidence on the effect of the February 1982 Mexican peso devaluation with its concomitant reduction in real income on the output of individual workers. Using a set of pooled data for 46 workers employed in two textile plants in Mexicali over a 22-week period the regression results show a significant increase in average output of about 15% in response to the 25% decrease in wages due to the devaluation. The study also finds that there was no significant response in output to the legislated, annual increase in money wages of January 1982.
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