Wage Income Distribution in Mexico: A Nonparametric Approach

This paper offers an analysis of wage income inequality for mexico and offers some insights about wel-fare improvements for several categories of workers. We analyze real wage distributions at different points of time, using mainly nonparametric techniques. Kernel densities and smoothing techniques are used to analyze changes in the distribution of wages and labor supply for the first quarters of 2010 and 2020. We also use stochastic dominance analysis to observe welfare improvements for each category of workers and the Wasserstein distance to confirm changes in wage inequality. our main results show that overall wage income inequality decreased, though the change is small and the categories that im-proved are those traditionally considered informal and low human capital workers, such as young people, workers with only elementary education and manufacturing or agricultural workers. The wel-fare of these groups also improved during the same period, yet welfare gains are negative for highly educated and experienced workers with a high level of human capital, including unionized and govern-ment or health sector workers. intra-group wage distribution became more unequal for these workers. The results contradict the technological-bias change found during the initial years of free trade and market reforms in the 1980s and 1990s.