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The Rise and Fall of Income Inequality in Mexico: 1989-2010

Author

Listed:
  • Raymundo M. Campos-Vazquez

    () (El Colegio de México)

  • Gerardo Esquivel

    () (El Colegio de México)

  • Nora Lustig

    () (Tulane University)

Abstract

Inequality in Mexico rose between 1989 and 1994 and declined between 1994 and 2010. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the ‘re-centered influence function’ method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-1994) due to institutional factors and labor demand. Returns declined (1994-2006) due to changes in supply and --to a lesser extent--in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000.

Suggested Citation

  • Raymundo M. Campos-Vazquez & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico: 1989-2010," Serie documentos de trabajo del Centro de Estudios Económicos 2012-04, El Colegio de México, Centro de Estudios Económicos.
  • Handle: RePEc:emx:ceedoc:2012-04
    as

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    File URL: http://cee.colmex.mx/documentos/documentos-de-trabajo/2012/dt20124.pdf
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    References listed on IDEAS

    as
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Rise and Fall of Income Inequality in Mexico: 1989-2010
      by Maximo Rossi in Wikiprogress América Latina on 2012-03-12 18:30:00

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    Cited by:

    1. Luis F. López-Calva & Nora Lustig & John Scott & Andrés Castañeda, 2013. "Gasto social, redistribución del ingreso y reducción de la pobreza en México: evolución y comparación con Argentina, Brasil y Uruguay," Commitment to Equity (CEQ) Working Paper Series 1317, Tulane University, Department of Economics, revised Mar 2014.
    2. Binelli Chiara, 2015. "How the wage-education profile got more convex: evidence from Mexico," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 509-560, July.
    3. Lustig, Nora & Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2013. "Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico," World Development, Elsevier, vol. 44(C), pages 129-141.
    4. Abdelkrim Araar & Luis Huesca, 2014. "Comparison of the Tax System Progressivity Over Time: Theory and Application with Mexican Data," Cahiers de recherche 1419, CIRPEE.
    5. repec:bla:labour:v:31:y:2017:i:1:p:73-104 is not listed on IDEAS
    6. Luis Huesca Reynoso & Abdelkrim Araar, 2016. "Comparison of fiscal system progressivity over time: theory and application in Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 31(1), pages 3-45.
    7. repec:aru:wpaper:201304 is not listed on IDEAS
    8. Adams, Samuel & Atsu, Francis, 2015. "Assessing the distributional effects of regulation in developing countries," Journal of Policy Modeling, Elsevier, vol. 37(5), pages 713-725.
    9. Luis Felipe López-Calva & Santiago Levy Algazi, 2016. "Labor Earnings, Misallocation, and the Returns to Education in Mexico," IDB Publications (Working Papers) 7454, Inter-American Development Bank.

    More about this item

    Keywords

    inequality; wages; disposable income; labor markets; Mexico;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D60 - Microeconomics - - Welfare Economics - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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