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The dynamics of income inequality in Mexico since NAFTA

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  • Gerardo Esquivel

    ()
    (El Colegio de México)

Abstract

This paper reviews the pattern of income inequality in Mexico since 1994. It shows that in the past few years there has been an important reduction of income inequality in Mexico, which has almost reverted the sharp increase in inequality observed between 1984 and 1994. Using a Gini decomposition exercise we conclude that labor income, transfers and remittances have all played an important role in this process. We also argue that the equalizing effect of labor income and the reduction of wage inequality in Mexico can be explained by a structural change in Mexico‟s workforce composition in terms of education and experience. In general, we conclude that the recent reduction of inequality in Mexico is due to the interaction of both, the market and the State.

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File URL: http://cee.colmex.mx/documentos/documentos-de-trabajo/2010/dt20109.pdf
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Paper provided by El Colegio de México, Centro de Estudios Económicos in its series Serie documentos de trabajo del Centro de Estudios Económicos with number 2010-09.

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Date of creation: Nov 2010
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Handle: RePEc:emx:ceedoc:2010-09

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Web page: http://www.colmex.mx/centros/cee/
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Keywords: income inequality; Mexico; NAFTA; Gini decomposition;

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References

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  1. Guillermo Cruces & Leonardo Gasparini, 2008. "A Distribution in Motion: The Case of Argentina," CEDLAS, Working Papers 0078, CEDLAS, Universidad Nacional de La Plata.
  2. Ana Corbacho & Gerd Schwartz, 2002. "Mexico," IMF Working Papers 02/12, International Monetary Fund.
  3. Esquivel, Gerardo & Rodriguez-Lopez, Jose Antonio, 2003. "Technology, trade, and wage inequality in Mexico before and after NAFTA," Journal of Development Economics, Elsevier, vol. 72(2), pages 543-565, December.
  4. Ferreira, Francisco H.G. & Leite, Phillippe G. & Wai-Poi, Matthew, 2007. "Trade Liberalization, Employment Flows and Wage Inequality in Brazil," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Aaron Tornell & Gerardo Esquivel Hernández, 1997. "The Political Economy of Mexico's Entry into NAFTA," NBER Chapters, in: Regionalism versus Multilateral Trade Arrangements, NBER-EASE Volume 6, pages 25-56 National Bureau of Economic Research, Inc.
  6. Manoj Atolia, 2002. "Trade Liberalization and Rising Wage Inequality in Latin America: Reconciliation with HOS Theory," Working Papers wp2002_03_01, Department of Economics, Florida State University, revised Feb 2006.
  7. Pablo Acosta & Gabriel V. Montes-Rojas, 2008. "Trade Reform and Inequality: The Case of Mexico and Argentina in the 1990s," The World Economy, Wiley Blackwell, vol. 31(6), pages 763-780, 06.
  8. Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
  9. Airola, Jim & Juhn, Chinhui, 2005. "Wage Inequality in Post-Reform Mexico," IZA Discussion Papers 1525, Institute for the Study of Labor (IZA).
  10. Leonardo Gasparini & Guillero Cruces & Leopoldo Tornarolli, 2011. "Recent Trends In Income Inequality In Latin America," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  11. Verhoogen, Eric A., 2007. "Trade, Quality Upgrading and Wage Inequality in the Mexican Manufacturing Sector," CEPR Discussion Papers 6385, C.E.P.R. Discussion Papers.
  12. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February.
  13. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  14. Fairris, David & Popli, Gurleen & Zepeda, Eduardo, 2006. "Minimum wages and wage structure in Mexico," MPRA Paper 400, University Library of Munich, Germany, revised 2006.
  15. Cesar Patricio Bouillon & Arianna Legovini & Nora Lustig, 2003. "Rising Inequality in Mexico: Household Characteristics and Regional Effects," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 112-133.
  16. Stark, Oded & Taylor, J Edward & Yitzhaki, Shlomo, 1986. "Remittances and Inequality," Economic Journal, Royal Economic Society, vol. 96(383), pages 722-40, September.
  17. Raymond Robertson, 2007. "Trade and Wages: Two Puzzles from Mexico," The World Economy, Wiley Blackwell, vol. 30(9), pages 1378-1398, 09.
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Citations

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Cited by:
  1. Raymundo Campos & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989–2010," Working Papers 267, ECINEQ, Society for the Study of Economic Inequality.
  2. Eduardo Michel Camacho & Willy W. Cortez, 2012. "Distribución del ingreso y bienestar social en México 1984-2008," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(2), pages 347-378.
  3. Claudia Tello & Raul Ramos & Manuel Artís, 2013. "“Changes in Wage Structure in Mexico Going Beyond the Mean: An Analysis of Differences in Distribution, 1987-2008”," IREA Working Papers 201224, University of Barcelona, Research Institute of Applied Economics, revised Mar 2013.
  4. Souza, Pedro H.G.F., 2013. "The Decline in Inequality In Brazil, 2003-2009: The Role Of The State," Institute for Research on Labor and Employment, Working Paper Series qt33q062zj, Institute of Industrial Relations, UC Berkeley.
  5. Raymundo M. Campos-Vázquez, 2010. "Why did wage inequality decrease in Mexico after NAFTA?," Serie documentos de trabajo del Centro de Estudios Económicos 2010-15, El Colegio de México, Centro de Estudios Económicos.
  6. Acevedo, Carlos & Cabrera, Maynor, 2012. "Social Policies or Private Solidarity?: The Equalizing Role of Migration and Remittances in El Salvador," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Raymundo M. Campos Vazquez & Nora Lustig & Alma S. Santillán, 2014. "A methodological note on the measurement of labor income in Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 29(1), pages 107-123.
  8. Medeiros, Marcelo & Souza, Pedro H.G.F., 2013. "The State and income inequality in Brazil," Institute for Research on Labor and Employment, Working Paper Series qt584222f0, Institute of Industrial Relations, UC Berkeley.
  9. Raymundo M. Campos Vázquez & Andrés Hincapie & Rubén I. Rojas Valdés, 2011. "Family Income Inequality and the Role of Wives Earnings in Mexico: 1988-2010," Serie documentos de trabajo del Centro de Estudios Económicos 2011-07, El Colegio de México, Centro de Estudios Económicos.

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