Are manufacturing workers benefiting from trade? The case of Mexico’s manufacturing sector

Abstract

Purpose This paper aims to focus on the distributive implications of trade by studying how manufacturing workers’ relative earnings and employment have changed in post–North American Free Trade Agreement (NAFTA) Mexico (1995-2011). Design/methodology/approach Input–Output analysis and inequality analysis were combined to reveal the empirical relationship between trade, wage inequality and employment in the manufacturing sector in post-NAFTA Mexico. Findings The results reveal that the manufacturing sectors that produce for the export market tend to pay among the lowest wages and yet employ around half of the manufacturing working population; wages in labor-intensive sectors have not been increasing, while wage inequality has been rising; and employment creation due to trade is not always positive and sustained, hence does not seem to be a stable source of jobs. The paper concludes by discussing policy implications of the findings. Originality/value The main focus of the existing literature has been to explain the disconnection between trade and growth. This paper shifts the focus towards the distributive dimension of trade (rather than growth) by focusing on how manufacturing workers' relative earnings and employment have changed in post-NAFTA Mexico (1995-2011). Hence it attempts to contribute to the existing literature on the distributive implications of trade.

Comercio exterior y empleo en la frontera norte de México

“…Existen diferentes enfoques teóricos que subrayan los factores potenciales que pueden determinar la forma en que el crecimiento del comercio internacional impacta el crecimiento del empleo. Desde la teoría Keynesiana, el crecimiento de las exportaciones, como componente de la demanda agregada, puede estimular la producción y, por ende, al empleo (Villanueva, 2017). No obstante, el comercio internacional puede tener también un efecto en el empleo debido a su impacto en la productividad laboral, ya que puede modificar la composición sectorial de la economía y orientarla hacia actividades intensivas en capital (Gibson, 2011).…”

CELAC: Mexican Foreign Policy Interest on Latin American and Caribbean Regionalism

“…Indeed, economic interest becomes the main driving force for the formation of free trade agreements between its member countries. The Mexican government believes that the expansion of the free trade agreement is capable to overcome national economic conditions, which is expected to result in greater investor confidence, attract more foreign investment, and create jobs (Andreas, 1996;Flores et al, 2018;Neto & Malamud, 2015;Ramirez, 2006;Villanueva, 2017;Waldkirch, 2010) .…”

“…The US government is the biggest trading partner for Mexico. About 80% of Mexico's exports go to the US market, and around 47% of Mexico's imports are supplied by the US (Campos-Vázquez, 2013;Escobar Gamboa, 2013;Esquivel & Rodrıǵuez-López, 2003;Hanson, 2003;Ibarra-Yunez, 2003;Moreno-Brid, Santamaría, & Rivas Valdivia, 2005;Ramirez, 2003Ramirez, , 2006Spreen, 2000;Villanueva, 2017;Villarreal, 2017;Waldkirch, 2010) Based on the background above, the objective of this paper is to analyze the sources of foreign policy consideration of Mexican government joining the CELAC regional cooperation amid a fairly strategic bilateral relationship with the United States. The research is expected to contribute to the reference to International Relations studies relating to the theory and analysis of foreign policy especially those interested in the American politics and regionalism.…”