The Impact of the North American Free Trade Agreement (NAFTA) On Industrial Wages in Mexico

NAFTA was expected to raise industrial wages in Mexico; however, ten years later, the opposite has occurred. Aggregate data for the first decade show a significant downturn in manufacturing wages, a slight upturn in wages in the maquiladoras and, for the first time in history, synchronization between wages paid in both industries. Data, disaggregated into nine industrial branches, show that manufacturing wages converged with those of the maquiladoras in a third of the cases, fell below the maquiladora level in another third, and remained independent in the rest. These results are explained in the light of the type of industrial restructuring resulting from trade liberalization.