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UNU-WIDER WP/2012/010 The Rise and Fall of Income Inequality in Mexico, 1989–2010

Support functions

A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

Table of contents

WP/010 The Rise and Fall of Income Inequality in Mexico, 1989–2010

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-centred influence function’ method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-94) due to institutional factors and labour 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.
Publisher:
UNU-WIDER
Series:
WIDER Working Paper
Volume:
2012/10
Title:
WP/010 The Rise and Fall of Income Inequality in Mexico, 1989–2010
Authors:
Raymundo Campos, Gerardo Esquivel, and Nora Lustig
Publication date:
January 2012
ISBN 13 Web:
978-92-9230-473-7
Copyright holder:
© UNU-WIDER
Copyright year:
2012
Keywords:
inequality, wages, disposable income, labour markets, Mexico
JEL:
D31; J20; J31; O54
Project:
The New Policy Model, Inequality and Poverty in Latin America: Evidence from the Last Decade and Prospects for the Future
Sponsor:
UNU-WIDER gratefully acknowledges the financial contributions to the research programme by the governments of Denmark (Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online

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