Online from: 1988
|Title:||Trade, quality upgrading, and wage inequality in the Mexican manufacturing sector|
|Author(s):||Verhoogen E A|
|Journal:||Quarterly Journal of Economics, May 2008, Volume: 123 Issue: 2 pp.489-530 (42 pages)|
|Keywords:||Developing Countries, Exporting, Inequality, International Trade, Maquiladoras, Mexico, Product Quality, Remuneration|
|Article type:||Research paper|
|Reference:||37AM683 (Permanent URL)|
Design/methodology/approach - Compares the sales, revenues, employment and wages of 2,316 firms that did not export between 1993 and 2001, with those of 947 firms that did. Adds training programmes, educational level of workforce, absenteeism, accident and staff turnover rates. Applies the authors' quality-upgrading hypothesis (that quality rises as a result of higher exports).
Findings - Finds that larger and more productive plants were more likely to expand during the Peso crisis (1993-1997) than smaller plants, and this tendency receded between devaluations. Shows that wages rose faster at the same time, notably among white-collar staff associated with raising product quality.
Research limitations/implications - Proposes testing the model on trade costs and in other contexts to see if it is generalizable.
Originality/value - Develops a new theory to explain growing wage inequality.