Does Globalization Reward Education?

Abstract

Abstract Mexico has seen a significant improvement in the educational attainment of its population in recent decades, with the proportion of people with complete secondary schooling growing from 21% to 25%, and those with college degrees increasing from 11% to 18% in the period between 2005 and 2019. At the same time, the country stands out as an open, highly globalized economy. In 2021 foreign trade stood at 84% of GDP, with manufactures representing 77% of exports and 74% of imports. This chapter uses data from the Mexican Labor Survey (ENOE) and the Input-Output Matrix to explore the interplay between these two trends and, in particular, to assess whether employment in globalized sectors has rewarded human capital accumulation in the form of higher wages. The chapter shows that the skill premia in globalized sectors have shown a secular downward trend for both male and female workers, and that the premia for college and upper secondary education have been consistently lower than in nonglobalized sectors. While these trends are consistent with a reduction in income inequality, and with shortfalls in the geographical coverage and the quality of educational opportunities, it is important to not lose sight of what is driving them: In both globalized and nonglobalized sectors, the incomes of most workers have remained stagnant, whereas those for people with college degrees have shown a substantial decline. Globalization does not, therefore, appear to have rewarded education in Mexico.