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

  • Raymundo M. Campos-Vazquez

    ()

    (El Colegio de México)

  • Gerardo Esquivel

    ()

    (El Colegio de México)

  • Nora Lustig

    ()

    (Tulane University)

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.

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File URL: http://cee.colmex.mx/documentos/documentos-de-trabajo/2012/dt20124.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 2012-04.

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Date of creation: Jan 2012
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Handle: RePEc:emx:ceedoc:2012-04
Contact details of provider: Web page: http://www.colmex.mx/centros/cee/

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