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The quarterly empirical relationship between Mexican manufacturing labor productivity and salaries 1993-2015 is examined for causality and whether first order labor market equilibrium is evident. An equilibrium would mean salaries and labor productivity are cointegrated. Wages above productivity levels may lead to calls for government intervention in the labor market. Federal quarterly data cover the nine main divisions of the manufacturing sector (old classification) as well as manufacturing overall. We use two series: labor productivity and average salaries with adjustment for inflation using the US consumer price index (2010 = 100). The time series is from 1993.1 to 2015.3. Standard cointegration analysis with structural change is applied with structural breaks hypothesized in 2008 with the Great Recession and 1995 with the Peso crisis. Tests for stationarity are applied to potentially correct for problems using first differences. Results indicate a statistically significant and negative relationship between labor productivity and salaries early in the sample period that becomes positive after structural changes. Salaries are more sensitive to events and volatile while productivity exhibits stable growth during 1993-2015. Salaries were impacted by both the 1995 Peso crisis and the Great Recession (2008) but productivity was only impacted by the latter. Higher labor productivity has not been rewarded with higher salaries suggesting Mexican manufacturing workers are underpaid. The firms where they work therefore have excess profits that can be used for investment and/or pay raises. Only the Timber and Metals divisions are found to not have salaries and productivity cointegrated. Government intervention in the form of wage setting or wage protection to protect firms from higher labor costs is unnecessary as firms are underpaying their workers. The government should reduce its role in the manufacturing labor markets. Foreign firms can hire underpaid workers away from domestic industry and take advantage of the labor market disequilibrium. Unions can insist on higher salaries to match their highly productive members work. JEL Classifications: C22, L60, O47 Keywords: Labor Productivity, Salaries, Cointegration, Structural Change, Manufacturing, INTRODUCTION Labor market disequilibrium suggests higher salaries without higher labor productivity could produce destabilizing inflation leading to macroeconomic instability. In some countries such as Mexico, the threat of such instability [...]

Using recently available night lights and electricity consumption data for the 212 municipios (counties) of Veracruz state in southern Mexico, the informal economy is analyzed at the Mexican county level for the first time with such data. Most counties between 2000 and 2006 are found to have growing informal economies though the richest county, Boca Del Rio, exhibits a decline in informality suggesting a few wealthier counties may behave differently. Counties have a larger formal economy if they are in northern areas, have higher literacy rates, and more indigenous people. The informal economy appears to have reversed its declining share of total economic activity towards more growth during the Fox era though the regional government of Veracruz remained in the hands of the PRI perhaps limiting federal reform efforts. JEL Classifications: R3, O1, F00 Keywords: Veracruz, Informal Economy, and Night Lights, INTRODUCTION The shadow or informal economy has been studied for decades using various methods ranging from adjusting national GDP (macro) to household surveys (micro) with the definition of the informal [...]

A stochastic production function analysis of the 212 regions of Veracruz province in southern Mexico reveals some inefficiency in manufacturing, mining, trade and service sectors in recent years. Poverty indices appear to influence a region's ability to combine capital and labor to create output and value added in some years indicating a reduction in poverty could contribute to job growth and putting idle capital back to work at the local level. With the agricultural crisis in the province, high population centers have been able to absorb some of the workers and exhibit relative higher productivity in both goods and services. Efficiency indices by county can be used to guide tax sharing and expenditure responsibilities within provinces. JEL Classifications: R3, O1, F00 Keywords: Veracruz, Intra-regional Mexican Economy, INTRODUCTION The weak performance of the Mexican economy over the past 30 years as well as since independence continues to be an enigma given the great natural wealth and recent [...]

Public financing of Russia's zakrytye administrativno-territorial'nye obrazovaniya (ZATOs) or closed cities contribute to the growing fiscal crisis in the country. The ZATOs are maintained by the government for scientific researches such as nuclear weapons and space explorations. In contrast to typical Russian cities, ZATOs only have a executive branch of government and no legislative branch. Significantly, ZATOs are also observed to depend more on the federal budget as compared to other Russian cities., Scattered across Russia is an 'archipelago' of cities whose existence until recently was not even indicated on maps.(1) These are the ZATO (zakrytye administrativno-territorial'nye obrazovaniya) or closed cities. Existing mainly [...]

INTRODUCTION With collectivization in the 1930s, the agricultural sector became the 'Achilles' heel' of the Soviet economy. Despite relatively large amounts of agricultural investment over a long period, agricultural productivity [...]

I. INTRODUCTION In many developing countries, the information markets often are inefficient relative to more developed countries. Decision making is inhibited by the long search time needed to find information. [...]