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The purpose of this study is to investigate labor congestion in the automotive industry in Mexico.

By using the cluster and subcluster definitions by Delgado et al. (2016) and relying on an efficiency and production function perspective, this study estimates a standard production function and measures marginal returns of labor at the regional cluster and subclusters levels. To assess whether wages affect the finding of congestion and productivity, the model also measures the individual impact of wages on both total productivity and marginal returns of labor.

Among other results, this paper finds evidence of labor congestion in the automotive cluster in Mexico. This congestion deepens with wages and it is specific to some regions and some subclusters.

The methods used are based on panel data techniques but are fundamentally cross-section in nature. The time period available may condition these findings.

To the authors’ knowledge, this is the first study reporting congestion in the automotive cluster in Mexico.