Migration Magnet: The Role of Work Experience in Rural-Urban Wage Differentials in Mexico

37 Pages Posted: 27 Jun 2011 Last revised: 3 Oct 2014

See all articles by Maren M. Michaelsen

Maren M. Michaelsen

Ruhr University of Bochum; ISDC - International Security and Development Center

John P. Haisken-DeNew

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; McMaster University, Faculty of Social Sciences, Department of Economics

Date Written: June 1, 2011

Abstract

This study estimates separate selectivity bias corrected wage equations for formal and informal workers in rural and urban Mexico using data from the Mexican Family Life Survey (MxFLS). We control for different potential selection patterns using Probit and Multinominal logit models in the first step in which health, personality traits and family characteristics serve as exclusion restrictions for working per se and working in the formal sector. Oaxaca-Blinder Decompositions show that rural-urban wage inequality in the formal and informal sector is determined by differences in observable human capital. In the informal sector, the wage differential is mainly explained by differences in returns to experience. Furthermore, we analyse rural-to-urban migrants‘ labour market performance. The findings suggest that rural-to-urban migration will continue and the informal sector will further increase.

Keywords: Returns to experience, rural-urban wage differentials, informality, internal migration, Mexico

JEL Classification: J24, J31, R23, Q15

Suggested Citation

Michaelsen, Maren M. and Haisken-DeNew, John P., Migration Magnet: The Role of Work Experience in Rural-Urban Wage Differentials in Mexico (June 1, 2011). Ruhr Economic Paper No. 263, Available at SSRN: https://ssrn.com/abstract=1873309 or http://dx.doi.org/10.2139/ssrn.1873309

Maren M. Michaelsen (Contact Author)

Ruhr University of Bochum ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

ISDC - International Security and Development Center ( email )

Friedrichstr. 88
Berlin, 10117
Germany

John P. Haisken-DeNew

University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

McMaster University, Faculty of Social Sciences, Department of Economics ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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