Activities, Employment, and Wages in Rural and Semi-Urban Mexico

Abstract

This paper analyzes the labor markets in rural and semi-urban Mexico. The empirical analyses show that nonfarm income shares increase with overall consumption levels and, also, with time. Rural-dwellers in lower quintiles of the consumption distribution tend to earn a larger share of their nonagricultural incomes from wage labor activities. For the poorest, low-productivity wage labor activities are important. The quantile wage regression analysis for rural Mexico shows a rather heterogeneous impact pattern of individual characteristics across the wage distribution on monthly wages. The findings reveal that education is key to earning higher wages and that workers in more dispersed rural areas earn less than their peers in semi-urban rural areas (localities with less than 15,000 inhabitants). The rural nonfarm sector is heterogeneous and includes a great variety of activities and productivity levels across nonfarm jobs. Moreover it can reduce poverty in a couple of distinct but qualitatively important ways in rural Mexico. The analysis of nonfarm employment in rural Mexico, suggests that the two key determinants of access to employment and productivity in nonfarm activities are education and location.