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Inequality in Mexico: Labour markets and fiscal redistribution 1989–2014

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  • Campos-Vázquez Raymundo
  • Lustig Nora
  • Scott John

Abstract

Income inequality in Mexico increased between 1989 and 1994; between 1994 and 2006, inequality declined; and, between 2006 and 2014, inequality was again on the rise.We apply decomposition techniques to analyse the proximate determinants of labour income inequality and fiscal incidence analysis to estimate the first-order effects of taxes and social spending on the distribution of income.The key component that underlies the ‘rise-decline-rise again’ pattern was the evolution of returns to skills. In addition, while changes in fiscal policy in the 1990s were progressive and pro-poor, the redistributive effect has declined significantly since 2010, as transfers have become less progressive and net indirect taxes have increased.

Suggested Citation

  • Campos-Vázquez Raymundo & Lustig Nora & Scott John, 2018. "Inequality in Mexico: Labour markets and fiscal redistribution 1989–2014," WIDER Working Paper Series 188, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2018-188
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    References listed on IDEAS

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    Cited by:

    1. Vladimir Hlasny, 2019. "Redistributive Impacts of Fiscal Policies in Mexico: Corrections for Top Income Measurement Problems," LIS Working papers 765, LIS Cross-National Data Center in Luxembourg.

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    Keywords

    Top incomes; Poverty; Fiscal redistribution; Inequality; Labour income;

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