Chinese competition and its effects on Mexican maquiladoras

This paper provides evidence against the popular notion that Mexican maquiladora employment falls considerably as Mexican wages increase relative to Chinese wages. Applying panel data and seemingly unrelated regression (SUR) methods to Mexican maquiladora employment across border states between 1990 and 2001, we find negative wage effects in levels. In a two-step panel cointegration procedure, effects of relative wages on maquiladora employment vary between −0.076 and −0.091, while US real output growth yields strong coefficients ranging from 3.548 to 3.673. Compared to previous research, our results highlight the increasing integration between Mexican and US economies. Journal of Comparative Economics 34 (1) (2006) 130-145.