Effects of labor unions on regional economic development in Mexico

Authors

Rafael Otero, University of Texas-Pan American

Date of Award

5-1999

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

International Business

First Advisor

Dr. Alberto Davila

Second Advisor

Dr. Gilberto Cardenas

Third Advisor

Dr. Jose A. Pagan

Abstract

The purpose of this research is to help determine the net effect of trade unionism in Northern Mexico (Matamoros, Nuevo Laredo, Juárez, and Tijuana). The maquiladora industry is used to empirically test union regional economic effects because there are different union structures along the regions where maquiladora firms are located. The results of the investigation regarding the relative changes in wages in the maquiladora and non-maquiladora sectors for the four cities in the study are consistent with the hypothesis that the real wage growth in a region's maquiladora sector relative to the non-maquiladora sector is associated with the strength of the labor union(s) in the maquiladora industry of that region (H1a). The results in terms of the changes in the maquiladora sector employment are also consistent with the hypothesis that employment growth in a region's maquiladora sector relative to the non-maquiladora sector is associated with the strength of the labor union(s) in the maquiladora industry of that region (H1b). Finally, the estimated net effect of unions on the wage bill for each one of the regions is consistent with the hypothesis that the wage bill growth in a region's maquiladora sector is associated with the strength of the labor union(s) in the maquiladora industry of that region (H1c).

Implications for economic development and public policy along the U.S.-Mexico border labor markets are evident in the results of this investigation. The study provides useful information for policymakers to evaluate current labor policy on maquiladoras. Based on the results presented here, the government should ease labor laws in Mexico to make them more attractive for American and other foreign interests, perhaps by curbing union leadership power. Competition for labor contracts should be encouraged by fostering the creation of other unions, not necessarily by eliminating unions or limiting union membership. As found in this study, it is not union density that curtails investment, but rather, it may be the type of leadership in certain unions that hinders job creation. Public policy which fosters competition and encourages more democratic union leadership would contribute to more growth in maquiladoras in border cities like Matamoros.

Comments

Copyright 1999 Rafael Otero. All Rights Reserved.

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Granting Institution

University of Texas-Pan American