Place-specific determinants of income gaps: New sub-national evidence from Mexico

R. Hausmann, C. Pietrobelli, M.A. Santos

    Research output: Contribution to journalArticleAcademicpeer-review

    Abstract

    The literature on wage gaps between Chiapas and the rest of Mexico revolves around individual factors, such as education and ethnicity. Yet, twenty years after the Zapatista rebellion, the schooling gap has shrunk while the wage gap has widened, and we find no evidence indicating that Chiapas indigenes are worse-off than their likes elsewhere in Mexico. We explore a different hypothesis and argue that place-specific characteristics condition the choices and behaviors of individuals living in Chiapas and explain persisting income gaps. Most importantly, they limit the necessary investments at the firm level in dynamic capabilities. Based on census data, we calculate the economic complexity index, a measure of the knowledge agglomeration embedded in the economic activities at the municipal level. Economic complexity explains a larger fraction of the wage gap than any individual factor.
    Original languageEnglish
    JournalJournal of Business Research
    DOIs
    Publication statusPublished - 2021

    JEL classifications

    • d31 - Personal Income, Wealth, and Their Distributions
    • i24 - Education and Inequality
    • d63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • r58 - Regional Development Planning and Policy
    • o29 - Development Planning and Policy: Other

    Keywords

    • Development policy
    • Dynamic capabilities
    • Economic complexity
    • Mexico
    • Wage gaps

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