Globalization, location and localization of manufacturing employment, and urban wages in Mexico

This study explores urban wage disparities that are derived from the location and localization of manufacturing employment within a context of expanding globalization processes and mechanisms. Indeed, a core objective of the dissertation is to study the role that globalization plays in the contraction or expansion of urban wage disparities that are associated with the location and/or localization patterns of manufacturing activity. Location points to the proximity or accessibility of a metropolitan or urban area where firms (and their workers) are located to domestic and/or to foreign demand markets, and localization refers to the co-location or concentration of firms (and workers) within a same industrial sector in geographic space. The information obtained from the study has important policy implications for the economic development of a country’s urban landscape and fills the gap in our knowledge of how globalization affects urban economies. The case of Mexico is analyzed in this study. Data come primarily from the National Survey of Urban Employment for the years 1992 to 2004 and the National Survey of Occupation and Employment for the years 2005 to 2010, and is supplemented by author-defined data constructs and other external data. Urban wages are estimated following an augmented-Mincerian wage model that accounts for worker, firm, and urban characteristics. The findings reveal that the location of industrial activity matters more than its localization to explain wage disparities across urban areas in Mexico. The moderating influence of globalization appears also to be stronger on the effect of location on urban wages than the effect of localization on urban wages. In addition, results point to a moderating effect in the capacity of industrial agglomerations to generate externalities that is derived from their proximity or accessibility to demand markets; globalization appears to influence this relationship as well. Findings also reveal some gender differences.