Research Insights: How Did Mexican Local Labor Markets Respond to the Rising Import Competition in Their Domestic Markets?

Abstract

Due to an increase in import competition from the early 2000s, Mexico experienced a loss in manufacturing employment of 1.8 percentage points accompanied by a decrease in wages in the short run. These negative effects persisted but its size decreased in absolute value. Twenty after the shock, the negative effects have disappeared. This fade out on the aggregate effects on employment happened through several adjustments in the labor market. Wage employees were substituted by contract workers, and formal workers substituted by informal workers.

Gains from globalization and economic nationalism: AMLO versus NAFTA in the 2006 Mexican elections

“…In tandem with NAFTA, Mexico was being affected by an additional globalization shock: China's rise as a manufacturing powerhouse, hastily capturing international markets. The economic effects of the China shock in the US economy and in the Mexican economy have been studied by D. H. Autor et al (2013) and Blyde et al (2017). These shocks are relevant since they may affect how local labor markets perceive the most salient aspect of globalization in the Mexican political debate (NAFTA), as either beneficial or detrimental to their welfare.…”