Chapter 3 Female Labor Participation and Occupation Decisions in Post-NAFTA Mexico

Abstract

The objective of this chapter is to estimate the parameters defining female labor participation and occupation decisions in mexico. Based on a theoretical framework, we use micro data to estimate the wage-participation elasticity in urban Mexico. Consistency between the selectivity-adjusted wages and the multinomial participation equations is achieved via a two-step estimation procedure following Lee (1983). We use the results of our model to test and quantify three hypotheses explaining recent increases in female labor participation in urban mexico. Our results show that the observed 12 percent increase in female labor participation in mexico between 1994 and 2000 is explained by the combination of a negative income shock caused by the 1994–1995 participation; wage differentiaeso crisis, the increase in expected wages taking place in the manufacturing sector during the post-North American Free Trade Agreement (NAFTA) period, and a reduction in female reservation wage.

Citation

De Hoyos, R.E. (2011), "Chapter 3 Female Labor Participation and Occupation Decisions in Post-NAFTA Mexico", Polachek, S.W. and Tatsiramos, K. (Ed.) Research in Labor Economics (Research in Labor Economics, Vol. 33), Emerald Group Publishing Limited, Leeds, pp. 85-127. https://doi.org/10.1108/S0147-9121(2011)0000033006