Abstract
The wage premium between skilled and unskilled workers in Mexican maquiladoras has moved up, from 4.14 in January 1990 to 4.79 in March 2006. This 16 per cent increase in wage differentials favouring skilled workers is contrasted to a measure of relative labour supplies within a model of skill-biased technical change (SBTC). Estimating how this skill premium responds to technology (captured by either a time trend or the capital-expenditure share) and to relative labour supplies, we find support for theoretical models in which the skill premium increases in the long-run under strong technology effects. Error correction models confirm fast adjustment to long-run equilibrium, within about four months.
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