Structural change in Mexicos employment and the impact of Nafta

Abstract

Mexican society and economy are at an extremely complex historical crossroads.
The Mexican liberalization strategy, as in many other Latin American countries, has
privileged macroeconomic aspects, ignoring crucial issues such as savings and domestic
investment, growth and employment, among others. The results of this strategy are
unsustainable and present several weaknesses, as was evident in the crisis of December 1994.
An important aspect of this situation is that the private sector is at the center of the crisis.
Only a few economic activities have been able to generate employment opportunities above
the minimum necessary for Mexican society. Several time series models demonstrate that
GDP growth is fundamental for job creation; however, it is difficult to imagine that it is
possible to achieve an annual GDP growth greater than 10%, the level necessary to absorb
the growth of the economically active population. To mitigate this situation, a profound
reformulation of the liberalization strategy and an explicit job creation policy are suggested.

JEL Classification: F62; F43; F36.