US manufacturing imports from China and employment in the Mexican manufacturing sector

Since 2001 the manufacturing sector of Mexico has experienced a reduced growth rate. This study estimates the impact of U.S. and Chinese industrial activity on the demand for labor in the manufacturing sector of Mexico. With data on industrial activity, Chinese exports, wages and the peso-dollar exchange rate, a time series cointegration model is developed. The results show that exports from China to the USA and manufacturing wages have affected labor demand negatively, while factors such as the U.S. industrial production and the exchange rate tend to encourage manufacturing activity.