Research

Effects of Border Price Changes on Agricultural Wages and Employment in Mexico

Authors

Published

Journal of International Development, January (1st Quarter/Winter) 2013

Website

http://onlinelibrary.wiley.com/doi/10.1002/jid.2814/pdf

Abstract

This paper measures the impact of North American Free Trade Agreement–induced real border price changes of Mexican imports and exports on wages and employment of agricultural workers in Mexico. I find that changes in real border prices of crops did not affect agricultural wages. On the other hand, increases in the real price of vegetables (main agricultural export) were associated with an increase in employment in the cultivation of vegetables, whereas the drop in the real price of corn (main agricultural import) reduced the employment in the corn sector. This is in line with the predictions of neoclassical trade theory: in the absence of mobility costs or sector-specific skills, factors moved smoothly from import-competing sectors into export-competing sectors.

Silvia Prina