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Determinants of Manufacturing Employment in the M exican States, 2004–2017
Author(s) -
MejíaReyes Pablo,
TorresPreciado Víctor Hugo
Publication year - 2020
Publication title -
regional science policy and practice
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.342
H-Index - 8
ISSN - 1757-7802
DOI - 10.1111/rsp3.12245
Subject(s) - panel data , production (economics) , manufacturing sector , economics , wage , labour economics , wage growth , order (exchange) , growth model , demographic economics , econometrics , macroeconomics , finance
The aim of this paper is to investigate the effects of production and real wages on employment in the manufacturing sector spanning the 32 Mexican states from 2004 to 2017. This analysis is carried out by estimating spatial Durbin panel data models, which can capture heterogeneous performance across states and over time, for the growth rates of total formal manufacturing employment and its two components, permanent and temporary employment. Our results suggest that although the negative direct effects of real wage growth are relevant to the explanation of temporary employment growth, the total effect of production growth can be considered the main determinant of total employment, including both temporary and permanent employment dynamics. The estimated coefficients, however, show a rather small effect. A major policy implication of this is that central and state governments should pursue policies that enhance production growth in order to increase employment in this sector.