The Macroeconomics of Employment and Wages in Mexico

The main objective of this article is to study some aspects of the labor market in Mexico, on the basis of an econometric model. Starting with an unrestricted VAR, the author finds two cointegration vectors, one with employment and output, and one with nominal wages, minimum wages, the price index, and labor productivity. A congruent model with the growth rates of the variables, and including the cointegration vectors, is finally estimated. On the basis of this model the author carries out an analysis of the effects of macroeconomic variables upon employment and nominal wages.