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.
We study the employment effects of the collapse of Mexican exports to the USA due to the Covid-19 crisis and its recovery. The employment outcomes are broken down by gender and skill, which enables the investigation to assess how these employment categories were affected. The article finds that 33.6% of all the jobs lost at the height of the Covid-19 pandemic in Mexico were exclusively due to the collapse of exports to the USA. Trade collapse was biased against female and unskilled workers, although all the jobs lost were re-gained during the recovery, being again biased against female workers. Gender-responsive policies are needed to ensure an inclusive recovery and resilience against future trade shocks.
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