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Inequality and Fiscal Redistribution in Mexico

Author

Listed:
  • John Scott

    (Centro de Investigacion y Docencia Economicas (CIDE))

  • Enrique de la Rosa

    (CEQ Institute)

  • Rodrigo Aranda

    (Tulane University)

Abstract

This paper uses income and expenditure surveys from 1992 to 2014 and public tax and spending accounts to estimate the redistributive impact of Mexico’s fiscal system over this period. It presents standard and marginal benefit incidence analysis for the principal public transfers (education, health, social security, direct cash transfers) in 1992-2014, and for the full fiscal system for 2008–14. The paper also estimates the effects of a major recent fiscal reform for the years 2015–18: the transition from large subsidies to taxes on petrol. The analysis shows a continuous improvement in the redistributive effects of the fiscal system through the 1990s and 2000s associated with an increase in social spending and in the progressivity of this spending over this period. This trend stagnated and reversed after 2008/2010, reflecting in part an interruption of the expansive and progressive trend of social transfers, but especially a sharp decline of net indirect subsidies.

Suggested Citation

  • John Scott & Enrique de la Rosa & Rodrigo Aranda, 2017. "Inequality and Fiscal Redistribution in Mexico," Commitment to Equity (CEQ) Working Paper Series 65, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:65
    as

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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq65.pdf
    File Function: First version, 2017
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    References listed on IDEAS

    as
    1. Pablo Astorga, 2015. "Functional Inequality in Latin America: News from the Twentieth Century," Oxford Economic and Social History Working Papers _135, University of Oxford, Department of Economics.
    2. Arroyo Abad, Leticia & Davies, Elwyn & van Zanden, Jan Luiten, 2012. "Between conquest and independence: Real wages and demographic change in Spanish America, 1530–1820," Explorations in Economic History, Elsevier, vol. 49(2), pages 149-166.
    3. Allen, Robert C. & Murphy, Tommy E. & Schneider, Eric B., 2015. "Una De Cal Y Otra De Arena: Building Comparable Real Wages In A Global Perspective," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 33(1), pages 61-75, March.
    4. Susan W. Parker & Petra E. Todd, 2017. "Conditional Cash Transfers: The Case of Progresa/Oportunidades," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 866-915, September.
    5. Williamson, Jeffrey G., 2010. "Five centuries of Latin American income inequality," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(2), pages 227-252, September.
    6. Leticia Arroyo Abad, 2011. "Has Latin America always been unequal? A comparative study of asset and income inequality in the long twentieth century – By Ewout Frankema," Economic History Review, Economic History Society, vol. 64(4), pages 1417-1419, November.
    7. Pablo Astorga, 2015. "Functional Inequality in Latin America: News from the Twentieth Century," Oxford University Economic and Social History Series _135, Economics Group, Nuffield College, University of Oxford.
    8. repec:wbk:wbpubs:5959 is not listed on IDEAS
    9. John Scott, 2014. "Redistributive Impact and Efficiency of Mexico’s Fiscal System," Public Finance Review, , vol. 42(3), pages 368-390, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Raymundo M. Campos-Vázquez & Nora Lustig & John Scott, 2018. "Inequality in Mexico: Labour markets and fiscal redistribution 1989-2014," WIDER Working Paper Series wp-2018-188, World Institute for Development Economic Research (UNU-WIDER).
    2. Alaimo, Veronica & Cafagna, Gianluca & Elacqua, Gregory & Giles Álvarez, Laura & Izquierdo, Alejandro & Keefer, Philip & Martínez Von der Fecht, Matías & Vuletin, Guillermo & Moreno-Serra, Rodrigo & P, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152, August.
    3. Miguel Ángel Mendoza-González & Luis Quintana-Romero & Andrea Guerrero-Jiménez, 2024. "Regional per capita income inequality and fiscal policy in Mexico, 1989–2021," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(4), pages 1681-1699, December.
    4. John R. Scott & Ricardo Massa & Ana Cecilia Parada, 2024. "Distributive Impact of Green Taxes in Mexico," Working Paper d237a40f-8742-49a5-b30a-0, Agence française de développement.
    5. Rivas, Aldair & Chávez, Emmanuel & Rojas, Irvin & Zaragoza, Aaron, 2025. "The legal and real incidence of VAT Reforms in Mexico: Distributional effects and impacts on poverty," Economics Letters, Elsevier, vol. 248(C).
    6. Raymundo Campos-Vázquez & Nora Lustig & John Scott, 2018. "Inequality in Mexico: Labour markets and fiscal redistribution 1989–2014," WIDER Working Paper Series 188, World Institute for Development Economic Research (UNU-WIDER).
    7. Frederic Lambert & Hyunmin Park, 2019. "Income Inequality and Government Transfers in Mexico," IMF Working Papers 2019/148, International Monetary Fund.

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    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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