Manufacturing real wages in Mexico

Abstract

In this paper we analyse the recent evolution and determinants of real wages in Mexico's manufacturing sector, using theories based on the assumption of imperfect competition both in the product and in the labour markets, especially wage-bargain theory, insider-outsider and mark-up models. We show evidence that the Mexican labour market does not behave as a traditional competitive market. The proposed explanation for this fact is that some workers benefit from advantages when compared with others, so that they can get a greater share of the proceedings of the productive process. Also, we find that changes in the degree of competition in the market for output influence the behaviour of real wages.

Transnational Corporations from the Standpoint of Workers

“…In the privatisation discourse one major argument was that superior technology of a European company, such as Volvo, was going to be a substitute for obsolete and backward Mexican production, thus saving production in an increasingly insecure context of neoliberal globalisation. Developments indicate a sharper divergence in wages, and increased inequalities, since the signing of the NAFTA agreement (López and López Gallardo, 2006).…”

Exchange rate pass-through inflation and wage differentials in late-industrializing economies: the Mexican case

“…In the manufacturing industry, only 20% of firms report unionized labor (López and López, 2006); and a tripartite body, in which representatives of the government, entrepreneurs and labor unions participate, settles the minimum wage rates for blue and white collar activities, which operate as guidelines for industry and firm wage contracting. These elements, as we shall see, account for the unusual inverse relationship that Graph 1 reveals, between the rate of inflation and changes in unit labor costs in manufacturing.…”