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Mexico : human capital effects on wages and productivity (English)

The authors follow the Hellerstein, Neumark, and Troske (1999) framework to estimate marginal productivity differentials and compare them with estimated relative wages. The analysis provides evidence on productivity and nonproductivity-based determinations of wages. Special emphasis is given to the effects of human capital variables, such as education, experience, and training on wages and productivity differentials. Higher education yields higher productivity. However, highly educated workers earn less than their productivity differentials would predict. On average, highly educated workers are unable to fully appropriate their productivity gains of education through wages. On the other hand, workers with more experience are more productive in the same proportion that they earn more in medium and large firms, meaning they are fully compensated for their higher productivity. Finally, workers in micro and small firms are paid more than what their productivity would merit. Training benefits firms and employees since it significantly increases workers' productivity and their earnings.

Details

  • Author

    Lopez-Acevedo,Gladys C., Rubio Sanchez,Marcela, Tinajero Bravo,Monica

  • Document Date

    2005/12/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS3791

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Mexico,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2010/07/01

  • Disclosure Status

    Disclosed

  • Doc Name

    Mexico : human capital effects on wages and productivity

  • Keywords

    productivity differential;in-house training;wage equation;wage differential;number of workers;years of schooling;upper secondary education;quality employment;quality of employment;effects on wage;distribution of workers;relative wage;production function;technology adoption;long-term economic growth;forms of contract;maximum likelihood method;educated work force;number of women;factor of production;information on education;machinery and equipment;share of benefit;improvement in productivity;cost materials;competitive labor market;gender wage gap;investment in research;effects of gender;high wage;base case;marginal productivity;working experience;permanent worker;firm size;capital asset;temporary worker;productivity gain;external training;micro firms;Higher Education;firm level;standard error;worker productivity;demographic group;wage determination;plant level;gender discrimination;bargaining power;total worker;earnings equation;positive coefficient;older worker;occupational category;manufacturing sector;productivity outcome;firm ownership;long-term contract;union membership;export orientation;perfect substitute;wage increase;long-run employment;equation system;male worker;job security;wage premium;tobacco account;0 hypothesis;productivity differences;productivity level;temporary contract;wood product;wage growth;work environment;technological advancement;cognitive ability;comparative advantage;empirical literature;panel data;positive impact;private institution;university-level education;empirical evidence;paper product;sampling design;input cost;educational level;work history;small sample;workplace practice;firm-level productivity;employee performance;increase productivity;aggregation bias;price index;institutional rigidity;productivity gap;earnings increase;young ones;wages rise;survey data;wage negotiation;individual productivity;individual level;differentiated impact;descriptive statistic;demographic information;manufacturing establishment;petrochemical industry;demographic characteristic;adequate compensation;data limitation;economic census;significant evidence;Fixed Assets;weighted average;model specification;behavioral equation;medium firms;

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Citation

Lopez-Acevedo,Gladys C. Rubio Sanchez,Marcela Tinajero Bravo,Monica

Mexico : human capital effects on wages and productivity (English). Policy, Research working paper ; no. WPS 3791 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/115891468279548213/Mexico-human-capital-effects-on-wages-and-productivity