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Volatility of Employment in the Mexican Offshoring Industry

Volatility of Employment in the Mexican Offshoring Industry. Myriam Alejandra Gómez Cárdenas Advisor: Lionel Fontagné. Introduction. Motivation: The Maquiladoras are seen as a channel by which countries export to Mexico a portion of its employment fluctuations over the business cycle.

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Volatility of Employment in the Mexican Offshoring Industry

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  1. Volatility of Employment in the Mexican Offshoring Industry Myriam Alejandra Gómez Cárdenas Advisor: Lionel Fontagné

  2. Introduction • Motivation: • The Maquiladoras are seen as a channel by which countries export to Mexico a portion of its employment fluctuations over the business cycle. • Contribution: • Comparison of the adjustments at the extensive and intensive margins for different subsets of Maquila sectors over the period 1990-2006. • Benchmark Paper: • Paul R. Bergin, Robert C. Feenstra & Gordon H. Hanson, 2009. "Offshoring and Volatility: Evidence from Mexico's Maquiladora Industry," American Economic Review, American Economic Association, vol. 99(4), pages 1664-71, September.

  3. Empirical model • Extensive margin: Maquila share of manufacturing employment Number of plants Total Mexican manufacturing employment • Intensive margin: Total Mexican manufacturing employment Maquila share of manufacturing employment (Average) Employment per plant Logic of least squares:

  4. Database construction • Dependent Variables: • Extensive margin: Number of plants lnP = lnEsh + ln Et ln(plants) ln(mxemp_omfg) ln(obreros) – ln(mxemp_omfg) Dataset A Dataset B • Sources: • Mexican National Institute of Statistics (INEGI) • Mexican Central Bank • U.S. Bureau of Labor Statistics

  5. Database construction • Dependent Variables: • Intensive margin: (Ave) Employment per plant lnE = lnEsh + ln Et ln(obreros) – ln(plants) ln(mxemp_omfg) ln(obreros) – ln(mxemp_omfg) Dataset A Dataset B • Sources: • Mexican National Institute of Statistics (INEGI) • Mexican Central Bank • U.S. Bureau of Labor Statistics

  6. Statistical summariesEstablishments and employment at State-level United States of America Baja California Sonora Chihuahua Coahuila Nuevo Leon Tamaulipas Guanajuato Mexico Jalisco Puebla Pacific Ocean Guatemala • Source: Mexican National Institute of Statistics (December 2006)

  7. Statistical summariesEstablishments and employment at sector-level • Sector-level • Source: Mexican National Institute of Statistics (December, 2006)

  8. Statistical summariesEmployment for production workers • Source: P. Bergin, R. Feenstra and G. Hanson (2009)

  9. First regression results More rep.sectors (6) Lessrep.sectors (4) Allsectors (10) • Benchmark Authors’ sample (4) Notes: All variables are in logs. The sample contains data at a monthly frequency from 1996:1 to 2005:12. Regressions include controls for industry fixed effects. Standard errors are (clustered by industry) are in parentheses.

  10. First regression results More rep.sectors (6) Lessrep.sectors (4) Authors’ sample (4) Allsectors (10) • Extension Notes: All variables are in logs. The sample contains data at a monthly frequency from 1990:1 to 2006:12. Regressions include controls for industry fixed effects. Standard errors are (clustered by industry) are in parentheses.

  11. Further research • Granular origins of aggregate fluctuations (X. Gabaix, 2011): • Theory: Shocks experienced by large firms have the potential to generate aggregate shocks in a country. • Main motivation: • The Mexican offshoring industry represents an important share of the exports and GDP in the country. • Therefore, shocks in a few firms belonging to the Mexican maquila industry may explain the aggregate fluctuations on the volume of exports and GDP growth.

  12. Q & A • Thank you!

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