Migration Magnet: The role of work experience in rural-urban wage differentials in Mexico

This study estimates separate selectivity bias corrected wage equations for for-mal and informal workers in rural and urban Mexico using data from the Mex-ican Family Life Survey (MxFLS). We control for different potential selection patterns using probit and multinominal logit models in the first step in which health, personality traits and family characteristics serve as exclusion restric-tions for working per se and working in the formal sector. Oaxaca-Blinder Decompositions show that rural-urban wage inequality in the informal sector is mainly explained by differences in returns to experience. In the formal sector, only differences in average education explain the rural-urban wage gap. Fur-thermore, we analyse rural-to-urban migrants ' labour market performance. The findings suggest that rural-to-urban migration will continue and the informal sector will further increase