Allocation and misadjustment in the Mexican Labor Market

The role of abilities under multiple selection bias and complex sampling

Abstract

This article analyzes the importance of the worker's cognitive and physical abilities in the assignment to a job occupation (elementary, manual, and administrative), and the role of this potential bias in the identification of the parameters associated with wages and labor supply, the above in a context of multinomial selection and complex sample design.
Using the proposed methodology, the determinants of the salary equation are estimated by identifying returns to education, compensation for over-education, penalization for under-education, and returns to work experience; The determinants of labor supply are also estimated, all of the above by type of occupation and by gender.
The results obtained show that cognitive skills play a fundamental role in the correct assignment of administrative jobs, and to a lesser extent, of elementary and manual jobs; on the other hand, physical abilities play an opposite role in allocation. Once the pertinent biases are controlled, under-educated workers do not have a salary penalty in manual and elementary jobs; in contrast, in administrative jobs, if there is salary compensation in each additional year, and a penalty is received for each missing year, concerning the required years. On the other hand, the achievement of women's schooling is being rewarded in administrative occupations, increasing the cost of staying at home and being assigned more and more in administrative occupations at rates similar to those of men.
Additionally, the number of hours worked for men and women is determined by skills through the job assignment and will depend on whether the person is in the administrative, manual, or elementary sector, taking into account, in addition to schooling, the type of educational adjustment, and work experience.