Inequality reduction through self-employment under high inflation periods: the Mexican experience
AbstractWe propose self-employment as an explanation for the observed reduction in inequality occurring after the Mexican economic crisis of 1995. The evidence appears as a contradiction to the labour-hoarding hypothesis, which states that inequality was expected to increase because the only asset of the poor was labour. Self-employment has been an escape to inflation and staggered wages bringing as a consequence reduced inequality. Therefore, individuals will be pushed into self employment as a means of survival if they lost their jobs in the formal sector, or pulled into self employment attracted by higher potential earnings if their wages were losing purchasing power.
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Bibliographic InfoPaper provided by Escuela de Graduados en Administración Pública y Políticas Públicas, Campus Monterrey in its series Working Papers with number 20072.
Length: 26 pages
Date of creation: Jan 2007
Date of revision: May 2007
self employment; self-employment; inequality; crisis of 1995; informality; labour-hoarding;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-26 (All new papers)
- NEP-DEV-2007-05-26 (Development)
- NEP-LAB-2007-05-26 (Labour Economics)
- NEP-MAC-2007-05-26 (Macroeconomics)
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