34 ref.

This study examines how the pattern responds to trade liberalization by comparing Mexico's differentials with those in the United States between early and late periods of Mexico's trade liberalization. Finally, this paper extends the work of Cragg and Epelbaum by relating prices to changes in differentials. The results suggest that, in Mexico, relative wages in non-tradable sectors rise relative to tradable sectors. The U.S. pattern remains stable through the sample period. Both producer prices and net exports are positively related to the wage differentials of manufacturing industries. Although trade volumes increase between Mexico and the U.S., the pattern of differentials between the U.S. and Mexico becomes less similar over time. (MV)