Employment Local Multipliers in Mexico

• Main Authors: Nataly Hernández, Irvin Rojas
• Format: Article
• Language: English
• Published: Universidad Iberoamericana 2021-01-01
• Series: Sobre México
• Subjects: employment multipliers; Mexico; shift-share
• Online Access: https://sobremexico-revista.ibero.mx/index.php/Revista_Sobre_Mexico/article/view/43

In this paper we estimate the local multiplier of employment in the tradable sector on employment in the non-tradable sector in Mexico, over the 2000-2010 period. Instrumental variables estimations indicate that an exogenous change of one unit in employment in the tradable sector generates from 1.8 to 2.6 additional jobs in the non-tradable sector. Out of these, from 1 to 1.5 jobs correspond to the formal sector. Our results imply an opportunity for policy markers pursuing development strategies as the prevalence of a highly informal economy is often considered as an impediment for economic growth. Our study implies that creating jobs in the tradable sector represents a possible strategy for increasing formal employment in the non-tradable sector. Our analysis also reveals that increases in employment are twice as large for workers with nine and more years of education than for those with less than nine years of schooling.