Regional Differences in Human Capital and Occupational Choice: Evidence from Mexico

Abdulla K. Serikbayeva B. Oskenbayev Y. Taghizadeh-Hesary F.
December 2022 Palgrave Macmillan

European Journal of Development Research
2022 #34 Issue 6 2899 - 2922 pp.

This study attempts to explain productivity differences across regions in Mexico using individual-level census data. We argue that differences in education quality, school attendance, and occupational choices influence aggregate productivity across regions. To quantify these effects, we build a general equilibrium model with labor market frictions, education quality, and school enrollment. Our model predicts that increasing education quality and school enrollment rates raises the productivity of the Mexican regions, on average, by 7% and 17%, respectively. The regions with the occupational distribution skewed toward higher-skilled occupations are, on average, 3–4% more productive than the regions with lower levels of productivity. We also consider the effect of gender barriers on productivity as women encounter difficulties in having access to a wider variety of occupational choices than men. Mexico also has a significant proportion of women working in the home sector. Using a counterfactual analysis where women in the home sector are replaced by men, we find that reducing barriers for women to work in the broader labor market would increase the aggregate regional productivity by 9–12%. We also find that migration has a minimal effect on regional productivity.

Gender gap , Human capital , Migration , Occupational distribution , Productivity , Quality of education

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Nazarbayev University, 53 Kabanbay Batyr Avenue, Nur-Sultan, Kazakhstan
Kazakh-British Technical University, Tole Bi Street, 59, Almaty, Kazakhstan
Tokai University, 411 Kitakaname, Kanagawa, Japan

Nazarbayev University
Kazakh-British Technical University
Tokai University

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