Labor Productivity Convergence in Mexico

Abstract

Abstract Mexico exhibits the lowest labor productivity of all OECD countries and main groups of nations. However, little is known about its behavior at the sector-state level, or whether it was affected by the global financial crisis (GFC). Therefore, this paper explores the extent to which the GFC affected the convergence—catch-up—process of seventeen Mexican economic sectors in the 1999–2014 period. Moreover, this paper identifies the regions that were more affected by the GFC and analyzes whether the sectoral composition is driving the states’ labor productivity convergence patterns. Results suggest that the GFC pushed 13 economic sectors toward convergence and changed the direction of the pre-GFC catch-up trend in 15; that the labor productivity convergence pattern barely changed in the north of Mexico in the short term, and that the biggest changes occurred in the center and south regions; and that states’ sectoral composition drives their labor productivity patterns.