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The impact of trade on income inequality in Mexico

Author

Listed:
  • Andrea Bernini

    (University of Oxford)

  • Olaf J. de Groot

    (United Nations)

Abstract

Income inequality remains a significant concern in Mexico, despite a slight decrease in its measure in recent decades. This paper investigates the impact of changes in trade patterns resulting from the North American Free Trade Agreement (NAFTA) on income inequality in Mexico over the past 20 years. Through a decomposition into within- and between-sector inequality, this paper reveals that the contribution of the latter has increased in an environment characterized by decreasing overall income inequality. Trade accounts for approximately 14.5% of the total change in between-sector income inequality, representing the most substantial contribution among the factors identified in this study.

Suggested Citation

  • Andrea Bernini & Olaf J. de Groot, 2025. "The impact of trade on income inequality in Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 40(1), pages 1-46.
    • Handle: RePEc:emx:esteco:v:40:y:2025:i:1:p:1-46
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/463
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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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