What do factory jobs do for poor youths?

At least four things, according to David Atkin’s evidence from Mexican maquiladoras:

  1. Workers earn better wages than in non-export oriented industries;
  2. Women who get jobs have taller children;
  3. But youth drop out of school earlier to take the jobs; and
  4. For those that drop out, their wages in the long term are lower than if they had stayed in school and gone to work for the factories later.

The papers, exemplars of careful empirical research, are here and here.

One of David’s suggestions:  adolescents might be more impatient than adults and so make that long term income trade off (perhaps to the dismay of their future, older selves).

This is controversial stuff, especially to the stubbornly neoclassical economists. (Or at least the ones who don’t have teenage children.)

In fact, there’s plenty of evidence to suggest that adolescent brains aren’t yet fully developed, especially the frontal lobe. Most of all, they think less about the future and take more risks than they would when older.

I have plenty of neuropsych references somewhere on my hard drive, but this summary by Matt Rabin and Ted O’Donoghue is one of my favorites.

2 thoughts on “What do factory jobs do for poor youths?

  1. The paper makes the assumption that Mexican’s with high education can get jobs. As of 2005, data compiled by the Civic Observatory for Education showed that fewer than 20% of recent Mexican college graduates manage to find an appropriate position during their first round of job-hunting. Among Mexicans out of work in January 2005, 50.4% had either a high-school education or more schooling.

    I suspect that without the high-tech export sector, there would be even fewer high-skilled jobs available in Mexico.

  2. The natural experiment of turning 18 years old in the United States is a nice example of young adults not behaving in a perfectly rational way. Based on the incentives, a 17 year, 364 day old person should be much more likely to commit a crime than an 18 year old, because the punishments increase after your 18th birthday. However, there is almost no observed difference. Of course, I no longer have the source paper, so feel free to not take my word for it and look it up.

    That being said, the country is still better off with foreign investment and factories. Do you have any proposed solutions to the drop-out problem?