The Wage‐Share in an Open Economy. Discussing Mexico's Experience

Mexico's wage share in manufacturing has shown a downward trend. We discuss the main factors that have shaped this evolution during the period of 1994 to 2009 and we analyze this issue on the basis of Kalecki's theory of income distribution, but adapting to an open economy. We show that, changes in the degree of monopoly and in the composition of prime costs have had a great impact on income distribution. Further, trade opening has contributed to magnify the effect on manufacturing wage share of changes in the exchange rate.