Three Essays on Spatial Productivity Spillovers across Mexican Regions

Abstract

This thesis analyzes spatial productivity across Mexican geographical entities. It begins with an introduction chapter addressing productivity, the spatial topic, context, research questions, and the methodology employed. The second chapter presents an essay on the convergence in manufacturing labor productivity in Mexico, from 1993 to 2018. The study follows the tradition of economic growth studies but uses the analytical tools that spatial econometrics has been developing over the last few years. Three econometric models are estimated, the first two with the traditional view, while the third corresponds to a spatial econometric model. The results allow us to see that there is convergence between states and municipalities, as well as significant spillovers in manufacturing labor productivity between states and municipalities. This means that states or municipalities with high productivity have a positive impact on the productivity of neighboring states or municipalities. Empirical evidence also shows that, on average, a municipality takes 26.5 years to reduce 50% of the initial productivity gap, while it takes 99.4 years for a state, under initial growth conditions. The third chapter addresses the spatial disaggregation of productivity in a shift-share style model. The chapter analyzes which local components and national factors influence local manufacturing productivity. Results show that regional shifts increase the divergence between national and state-specific performance. Chapter four presents a study between wages and manufacturing labor productivity. The relationship is analyzed in the context of the state dimension and considers the impact that the productivity of neighboring entities has on local remunerations, given the proximity in geographic space. It is important to mention that the omission of the spatial structure in the estimates can lead to a bias in the estimation of the productivity parameter in relation to wages. The results show that a 1% increase in manufacturing labor productivity would increase wages by 0.1%, on average, in the state in question, while the spatial lag manufacturing labor productivity has an effect of 0.047% on wages. Finally, the last chapter contains conclusions, final remarks, policy implications, and lines of future work.