2026-07-01http://hdl.handle.net/123456789/417385This study performs an ex-post analysis of the effects of the trade liberalization in Mexico between 1989 and 2000, taking into account regional differences in the Mexican economy. The effects of trade liberalization are first translated into changes in regional prices and wages. Those estimates are plugged into a farm-household model to estimate the effect on households' welfare. The findings suggest that trade liberalization has affected domestic prices and labor income differently both across income groups and geographically across the country, hence producing diverse outcomes on different households. Regarding prices, the results indicate that trade liberalization has lowered relative prices of most non-animal agricultural products and, while reducing the cost of consumption, has reduced households' agricultural income, widening the income gap between urban and rural areas. The findings also show that trade liberalization has had diverse effects on wage rates. Skilled workers, for which trade liberalization has produced an increase in wages, have benefited relative to unskilled workers. Wages of unskilled workers have in many regions decreased as a result of trade liberalization. Similar differences are found in the geographic distribution of the benefits of trade liberalization, with the states closest to the U. S. border gaining threefold more relative to the least developed states in the south. Therefore trade liberalization, although beneficial, has contributed to an increase in inequality between the south and the north of the country, urban and rural areas, and skilled and unskilled labor. From a poverty perspective, the trade liberalization that occurred between 1989 and 2000 has had the direct effect of reducing poverty by about 3 percent, therefore lifting approximately 3 million individuals out of poverty.application/pdftext/plainCC BY 3.0 IGOhttp://creativecommons.org/licenses/by/3.0/igo/World BankAGRICULTURAL PRODUCTSAGRICULTUREAPPARELAVERAGE PRICESAVERAGE TARIFFBORDER PRICECAPITAL FLOWSCHANGES IN TRADECOMPETITIVE PRESSURESCONSUMERSCOST OF LIVINGDEMAND ELASTICITYDEVALUATIONDISEQUILIBRIUMDISPOSABLE INCOMEDOMESTIC MARKETDOMESTIC MARKETSECONOMETRIC ANALYSISECONOMIC CRISISECONOMIC GROWTHECONOMIC POLICIESECONOMIC POLICYECONOMIC THEORYELASTICITYEMPIRICAL EVIDENCEEMPLOYMENTEQUILIBRIUMEXCHANGE RATEEXPENDITURESFACTOR ENDOWMENTSFACTOR MARKETSFOREIGN CURRENCYGDPIMPACT OF TRADEIMPACT OF TRADE POLICIESIMPORT PRICESIMPORTSINCOMEINCOME ADJUSTMENTSINCOME DISTRIBUTIONINCOME EFFECTINCOME ELASTICITIESINCOME GROUPSINDIFFERENCE CURVESINFLATIONINFLATION RATELABOR FORCELABOR MARKETLABOR MARKETSMARGINAL UTILITYMARKET IMPERFECTIONSOPENNESSPOVERTY LINEPRICE CHANGESPRICE EFFECTPRICE ELASTICITIESPRICE ELASTICITYPRICE ELASTICITY OF DEMANDPRICE INDEXESPRODUCERSPRODUCTION COSTSPRODUCTION FUNCTIONPROFIT MARGINPURCHASINGPURCHASING POWERREAL INCOMEREAL WAGESSPREADSUPPLIERSTARIFF RATETARIFF RATESTARIFF REDUCTIONTARIFF REVENUETARIFF SCHEDULETIME SERIESTRADE COSTSTRADE FLOWSTRADE LIBERALIZATIONTRADE LIBERALIZATION PROCESSTRADE POLICIESTRADE POLICYTRADE REFORMSTRADE RESTRICTIONSTRANSACTION COSTSTRANSPORT COSTSUNSKILLED LABORUNSKILLED WORKERSUTILITY FUNCTIONWAGE DIFFERENTIALSWAGE GAPWAGE RATEWAGE RATESWAGES TRADEPOVERTYHOUSEHOLD ANALYSISEARNINGSFARM HOUSEHOLD ECONOMIESLABOR INCOMEAGRICULTURAL INCOMEINCOME GAPSCONSUMPTIONTRADE LIBERALIZATIONGEOGRAPHIC DISTRIBUTIONSKILLED WORKERS