What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009
Recent research shows that employment in Mexico's offshoring maquiladora industries is twice as volatile as employment in their U.S. industry counterparts. The analyses in this paper use data from Mexico's social security records and U.S. customs between the first quarter of 2007 and the l...
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| Format: | Policy Research Working Paper |
| Language: | en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://hdl.handle.net/10986/16381 |
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okr-10986-16381 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
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en_US |
| topic |
adjustment cost adjustment costs adjustment to shocks adverse effects average trade average wage average wages bilateral trade bilateral trade data Business Cycles changes in trade Comparative Advantage Consumer Price Index consumers customs demand shocks developing countries Development Economics development policy econometric models Economic Research economic shocks Economic Theory economic volatility Economics elasticity employee employment employment composition employment effects employment growth employment information employment levels employment models Employment Share employment trends export industries exportable goods exports external trade final goods financial crisis Firm Level firm productivity Foreign Direct Investment formal labor market future research GDP globalization gross domestic product human capital impact of trade impact of trade reforms imports Income Income Inequality industry trade industry wages interest rate intermediate inputs International Economics International Trade International Trade Commission Job Loss jobs Labor Adjustment Labor Adjustment Costs labor costs Labor Demand labor force Labor Market Labor Market Adjustment Labor Market Outcomes labor market variables Labor Market Volatility Labor Markets labor mobility labor supply Labour Labour Office long-run effects low employment mobility of labor nominal wages occupations outsourcing positive effects preliminary results production workers Real Wages skill upgrading skilled labor skilled workers supply curve total employment trade data trade effects trade flows trade liberalization trade models trade reforms trade shocks trade values trade variables transmission of shocks trough Unemployment value of imports Wage Bargaining wage changes wage data wage determination Wage Differentials wage effects wage flexibility wage gains wage growth wage increases worker workers World Trade World Trade Organization |
| spellingShingle |
adjustment cost adjustment costs adjustment to shocks adverse effects average trade average wage average wages bilateral trade bilateral trade data Business Cycles changes in trade Comparative Advantage Consumer Price Index consumers customs demand shocks developing countries Development Economics development policy econometric models Economic Research economic shocks Economic Theory economic volatility Economics elasticity employee employment employment composition employment effects employment growth employment information employment levels employment models Employment Share employment trends export industries exportable goods exports external trade final goods financial crisis Firm Level firm productivity Foreign Direct Investment formal labor market future research GDP globalization gross domestic product human capital impact of trade impact of trade reforms imports Income Income Inequality industry trade industry wages interest rate intermediate inputs International Economics International Trade International Trade Commission Job Loss jobs Labor Adjustment Labor Adjustment Costs labor costs Labor Demand labor force Labor Market Labor Market Adjustment Labor Market Outcomes labor market variables Labor Market Volatility Labor Markets labor mobility labor supply Labour Labour Office long-run effects low employment mobility of labor nominal wages occupations outsourcing positive effects preliminary results production workers Real Wages skill upgrading skilled labor skilled workers supply curve total employment trade data trade effects trade flows trade liberalization trade models trade reforms trade shocks trade values trade variables transmission of shocks trough Unemployment value of imports Wage Bargaining wage changes wage data wage determination Wage Differentials wage effects wage flexibility wage gains wage growth wage increases worker workers World Trade World Trade Organization Kaplan, David S. Lederman, Daniel Robertson, Raymond What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 |
| geographic_facet |
Latin America & Caribbean Latin America Mexico |
| relation |
Policy Research Working Paper;No.6268 |
| description |
Recent research shows that employment in Mexico's offshoring maquiladora industries is twice as volatile as employment in their U.S. industry counterparts. The analyses in this paper use data from Mexico's social security records and U.S. customs between the first quarter of 2007 and the last quarter of 2009 to identify four channels through which economic shocks emanating from the United States were amplified when transmitted into Mexico's offshoring labor market of Northern Mexico. First, employment and imports within industries are complements, which is consistent with imports being used as inputs for the assembly of exportable goods within industries. That is, when imports fell during the crisis, employment in Mexico was reduced rather than protected by the fall of imports. Second, contrary to other studies, employment is more responsive than wages to trade shocks. Third, fluctuations in Mexico-U.S. trade were associated with changes in the composition of employment, with the skill level of workers rising during downturns and falling during upswings. This implies that the correlation between average wages and trade shocks is partly driven by labor-force compositional effects, which may obscure individual-worker wage flexibility. Fourth, trade shocks affecting related industries (industries linked by employment flows affect employment at least as much as own-industry trade shocks, thus amplifying employment volatility through the propagation of shocks across industries within Northern Mexico. Furthermore, the data suggest that the observed fluctuations in U.S.-Mexico trade at the onset of the Great Recession in the U.S. were not associated with pre-existing employment trends in Northern Mexico. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kaplan, David S. Lederman, Daniel Robertson, Raymond |
| author_facet |
Kaplan, David S. Lederman, Daniel Robertson, Raymond |
| author_sort |
Kaplan, David S. |
| title |
What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 |
| title_short |
What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 |
| title_full |
What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 |
| title_fullStr |
What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 |
| title_full_unstemmed |
What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 |
| title_sort |
what drives short-run labor market volatility in offshoring industries? evidence from northern mexico during 2007–2009 |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://hdl.handle.net/10986/16381 |
| _version_ |
1764433029128781824 |
| spelling |
okr-10986-163812021-04-23T14:03:28Z What Drives Short-Run Labor Market Volatility in Offshoring Industries? Evidence from Northern Mexico during 2007–2009 Kaplan, David S. Lederman, Daniel Robertson, Raymond adjustment cost adjustment costs adjustment to shocks adverse effects average trade average wage average wages bilateral trade bilateral trade data Business Cycles changes in trade Comparative Advantage Consumer Price Index consumers customs demand shocks developing countries Development Economics development policy econometric models Economic Research economic shocks Economic Theory economic volatility Economics elasticity employee employment employment composition employment effects employment growth employment information employment levels employment models Employment Share employment trends export industries exportable goods exports external trade final goods financial crisis Firm Level firm productivity Foreign Direct Investment formal labor market future research GDP globalization gross domestic product human capital impact of trade impact of trade reforms imports Income Income Inequality industry trade industry wages interest rate intermediate inputs International Economics International Trade International Trade Commission Job Loss jobs Labor Adjustment Labor Adjustment Costs labor costs Labor Demand labor force Labor Market Labor Market Adjustment Labor Market Outcomes labor market variables Labor Market Volatility Labor Markets labor mobility labor supply Labour Labour Office long-run effects low employment mobility of labor nominal wages occupations outsourcing positive effects preliminary results production workers Real Wages skill upgrading skilled labor skilled workers supply curve total employment trade data trade effects trade flows trade liberalization trade models trade reforms trade shocks trade values trade variables transmission of shocks trough Unemployment value of imports Wage Bargaining wage changes wage data wage determination Wage Differentials wage effects wage flexibility wage gains wage growth wage increases worker workers World Trade World Trade Organization Recent research shows that employment in Mexico's offshoring maquiladora industries is twice as volatile as employment in their U.S. industry counterparts. The analyses in this paper use data from Mexico's social security records and U.S. customs between the first quarter of 2007 and the last quarter of 2009 to identify four channels through which economic shocks emanating from the United States were amplified when transmitted into Mexico's offshoring labor market of Northern Mexico. First, employment and imports within industries are complements, which is consistent with imports being used as inputs for the assembly of exportable goods within industries. That is, when imports fell during the crisis, employment in Mexico was reduced rather than protected by the fall of imports. Second, contrary to other studies, employment is more responsive than wages to trade shocks. Third, fluctuations in Mexico-U.S. trade were associated with changes in the composition of employment, with the skill level of workers rising during downturns and falling during upswings. This implies that the correlation between average wages and trade shocks is partly driven by labor-force compositional effects, which may obscure individual-worker wage flexibility. Fourth, trade shocks affecting related industries (industries linked by employment flows affect employment at least as much as own-industry trade shocks, thus amplifying employment volatility through the propagation of shocks across industries within Northern Mexico. Furthermore, the data suggest that the observed fluctuations in U.S.-Mexico trade at the onset of the Great Recession in the U.S. were not associated with pre-existing employment trends in Northern Mexico. 2013-12-17T15:36:29Z 2013-12-17T15:36:29Z 2012-11 http://hdl.handle.net/10986/16381 en_US Policy Research Working Paper;No.6268 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Latin America Mexico |