Relative Earnings of Permanent and Casual Employees in a Mexican City

Uses a data set from Guadalajara, Mexico, to investigate the determinants of the wage structure of manual employees in the urban sector of a developing economy. Focuses particular attention on whether there is a significant difference in remuneration between permanent and casual employees after allowing for the different human capital and other characteristics of the two groups. Finds that, once a correction has also been made for selectivity bias, a substantial wage gap in favour of permanent employees exists. Also confirms and estimates wage differentials associated with educational background and union membership. However, finds no support for the idea that a large multinational will pay wages above the expected level for a given type of worker.