Endogenous Skill Acquisition and Export Manufacturing in Mexico

Studies based on \u85rm-level data \u85nd that both exporting \u85rms and multinational corpora-tions pay higher wages, for a given skill level. However, the literature overlooks the fact that export manufacturing \u85rms may also change the educational choices of the workforce. This paper con\u85rms that for Mexico over the period 1986-2000, the export sector pays higher wages than other sectors, but school drop out increases with the arrival of new export jobs. The work-ers induced to enter export manufacturing eventually earn less than they would have earned had the jobs never appeared and they stayed in school. I causally identify these e¤ects by looking within 2,443 municipalities and examining how education varies over cohorts, depending on how many new jobs arrive during a cohorts key school-leaving ages. Export manufacturing attracts impatient students by paying very high relative wages accompanied by low returns to a few more years of education, and o¤ering plenty of jobs to low-skill workers straight out of school. The magnitudes I \u85nd suggest that for every ten new jobs created, one student drops out of school at grade 9 rather than continuing on through grade 12