Three essays on education, wages, and the labour market in Mexico

This thesis comprises three empirical chapters on the labour market outcomes of education, minimum wages, and public sector wage policies in Mexico. The first chapter estimates the impact of the 1993 educational reform in Mexico, which raised compulsory schooling to the age of 15, on labour market outcomes, particularly earnings. The reform raised average years of schooling by between 0.26 and 0.32 years. However, the evidence suggests that this reform did not have an effect on earnings or other labour market outcomes. The second chapter analyses the role of the 2012 Minimum Wage (MW) intervention in Mexico on the wage distribution. The results provide evidence that exposure to an up-rating in the MW increased wages from the 10th to the 90th percentiles by between 3.3% to 5.5%, respectively. Overall, the MW policy is not associated with reducing inequality. The MW up-rating appears to be a mechanism that plays a crucial role in wage inequality for public sector workers. This may be due to the use of the MW as a numeraire for increments in salary payments across the public sector pay scales. However, the influence of other confounders in the labour market may likely have coincided with the introduction of this MW policy, thus, challenging its interpretation as a causal effect in this case. The third chapter exploits the implementation of the 2018 Federal Law on the remuneration of public servants in Mexico to examine the impact of a government wage policy on the public–private sector wage gap. The results report that the wage gap was reduced, both at the mean and across the wage distribution. The policy is found to reduce the wage gap between these two sectors. In particular, the findings suggest that at the median the policy is responsible for reducing the public sector pay premium by about 11%.