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Title: Rising College Premiums in Mexico: Skill Biased Technical Change or Structural Transformation?

Citation Type: Working Paper

Publication Year: 2010

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Abstract: We examine the rise in college premiums in Mexico using census data from 1990 and 2000. Previous studies attribute rising skill premiums in developing economies residually to skill-biased technical change, described as an increase in demand for skilled workers within sectors. We argue that structural transformation, or between-sector shifts in employment composition, can explain most of the increase in Mexicos college premium. Our conclusions differ from those of previous analyses because, recognizing that different service occupations produce different products, our methodology permits occupation-wage premiums to influence the effects of employment composition on college premiums. Our results suggest that most of the skills-demand increases arise due to increasing demand for a handful of high-skilled occupations outside the manufacturing sector. This implies that rather than focusing on the skill biased effects of trade liberalization on manufacturing technology, the inequality debate should also pay attention to how to efficiently ensure equitable access to training for specific high-paying professions.

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Authors: Acuna Mohr, Belinda; Mehta, Aashish

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Institution: University of California - Santa Barbara

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Publisher Location: Santa Barbara, CA

Data Collections: IPUMS International

Topics: Education

Countries: Mexico