Inequality reduction through self-employment under high inflation periods: the Mexican experience
We 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.
|Date of creation:||Jan 2007|
|Date of revision:||May 2007|
|Contact details of provider:|| Web page: http://www.mty.itesm.mx/egap/|
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