Economic determinants of wages in mexican manufacturing

Abstract

In order to explore the economic determinants of the real salaries in Mexican manufacturers a model of imperfect competition for small and open economies was used and a modern time series analysis was performed. The findings show that the variable in question plays a residual role in a system composed, additionally, by profit margin, labor productivity, and competitiveness. The reliable empirical evidence also shows that the impact of the other factors on the first factor is distinct if it operates in a closed economy as compared to its operation in an open economy The key variable is labor productivity, for both its positive effects (in a closed economy), and its even greater positive effects (in an open economy), on salaries, and for its direct association with competitiveness.