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This paper formulates a static applied general equilibrium model of a small open economy and then calibrates it to the Mexican input–output matrix for 1987. We use the calibrated model to quantify how much of the dramatic rise in the skill premium over the period 1987–1994, following the liberalization of the trade policy in Mexico, can be accounted for by the change in the extensive margin of trade or trade variety. Our numerical experiments show that the increase in the extensive margin of Mexican manufactured trade with the U.S. can account for up to approximately 12 percent of the actual increase in skill premium in Mexico from 1987 to 1994. [ABSTRACT FROM AUTHOR]

Abstract: Previous studies have found that a tightening of the balance of payments (BP) constraint can explain the slowdown in Mexico's growth after its trade liberalization in the late 1980s. This paper develops a disaggregated model of the BP constraint with two types of exports (manufactures and primary commodities) and two types of imports (intermediate and final goods). Econometric estimates (including tests for structural breaks) show that the BP-equilibrium growth rate did not fall, but instead rose in the post-liberalization period, so this model cannot account for the country's growth slowdown. Instead, the analysis points to the need to consider the real exchange rate as well as internal obstacles and policies. [Copyright &y& Elsevier]

After twenty years of trade liberalization in Mexico, the relationship between gender wage inequality and trade remains insufficiently studied, in spite of evidence of increasing numbers of women in industrial employment. This study aims to analyze the effects of export orientation and other characteristics that represent the industrial underpinnings of restructuring on gender wage inequality for 2001-5. There is consistent evidence of the negative impact of export orientation on men's and women's wages and the gender wage ratio, signifying that women lose in both absolute and relative terms. This result holds after controlling for women's share of employment and the skills of both genders, contrary to the expected effect from trade on equality. There is also a negative relation between a rise in the proportion of unskilled workers and the gender wage ratio, which suggests that the trade-induced skill hypothesis cannot be considered an adequate explanation for gender inequality. [ABSTRACT FROM AUTHOR]