Wage inequality across METROPOLITAN municipalities in Mexico, 2010-2020

Abstract

This work aims to analyze wage inequality from a spatial perspective. We specify a spatial autoregressive model with the average wage per municipality dependent on a spatially lagged variable and other controls like productivity, schooling, and migration. We estimate a quantile regression to determine the spatial effect of wage in a region over quartiles of the wage distribution with data from population censuses in 2010 and 2020. The main findings indicate that territory is critical to explaining wage inequality in 2010 but not 2020. Productivity increased wage inequality in 2020, and internal migration equalizes the wage.