Trade and occupational employment in Mexico since Nafta

Type Conference Paper - ICITE regional Conference
Title Trade and occupational employment in Mexico since Nafta
City Santiago
Country/State Chile
We analyze the effects of trade liberalization on Mexican employment at an occupational level from
1992 to 2009. After ranking occupations by skill level, we find that the reduction in trade costs associated
with Mexico's entry to NAFTA is related to larger employment expansions in low-skill occupations. This is
evidence against a story of skilled-biased technological change, and in favor of a heterogeneous-firm model
of trade in tasks where the offshoring cost of an occupation is positively related to its skill level. After
NAFTA, labor demand for unskilled workers has increased and labor demand for skilled workers has been
stagnant, even though supply of skilled workers has increased in the last 20 years. We provide intuitive
evidence to identify a number of relevant bottlenecks in the Mexican economy.

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