Robertson, Raymond2014-01-032014-01-032005-09World Bank Economic Reviewdoi:10.1093/wber/lhi016https://hdl.handle.net/10986/16469This article analyzes three criteria for labor market integration between Mexico and the United States (U.S.) before and since the North American Free Trade Agreement (NAFTA): the responsiveness of Mexican wages to US wage shocks, the speed at which relative wages return to a long-run differential, and changes in the rate of convergence of absolute wages. Tests for increased integration using these three criteria generate mixed results, which are then explored by directly incorporating trade, foreign direct investment (FDI), and migration. The results suggest that trade and FDI did in fact positively contribute to integration but that the increase in border enforcement depressed Mexican wages, masking the positive benefits.en-USCC BY-NC-ND 3.0 IGOADVERSE EFFECTAGE GROUPAGE GROUPSAVERAGE WAGEAVERAGE WAGESBASE YEARCAPITAL FLOWSCDCOMMERCECOMMODITY PRICECONSUMER PRICECONSUMER PRICE INDEXDEBTDEBT CRISISDEMAND CURVEDEVELOPMENT ECONOMICSECONOMETRICSECONOMIC FLUCTUATIONSECONOMIC HISTORYECONOMIC INTEGRATIONECONOMIC RESEARCHECONOMIC RISKECONOMICSEMPLOYMENT GROWTHEQUILIBRIUM WAGESESTIMATED PARAMETERSEXCHANGE RATESEXPORTSFACTOR PRICEFREE TRADEGDPGDP PER CAPITAGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELSGLOBALIZATIONGROWTH RATEHOUSEHOLD SURVEYSINCOMEINCOME INEQUALITYINFLATIONINTERMEDIATE GOODSJOBSLABOR ADJUSTMENTLABOR ADJUSTMENT COSTSLABOR DEMANDLABOR ECONOMICSLABOR FORCELABOR MARKETLABOR MARKET ADJUSTMENTLABOR MARKETSLABOR MIGRATIONLABOR MOBILITYLABOR SUPPLYLABOURLABOUR MARKETLIVING STANDARDSMANUFACTURING INDUSTRIESMARKET INTEGRATIONNAFTAPOLITICAL ECONOMYPOSITIVE EFFECTSPREVIOUS SECTIONPRICE CHANGESPRICE INDICESPRODUCTIVITYREAL WAGEREAL WAGESRETAILRETAIL TRADESKILLED WORKERSTRADE LIBERALIZATIONURBAN EMPLOYMENTWAGE DATAWAGE DIFFERENTIALWAGE DIFFERENTIALSWAGE EQUALIZATIONWAGE GAPWAGE INEQUALITYWAGESWORKERJournal ArticleWorld Bank10.1596/16469