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

Raymundo Campos-Vazquez, Gerardo Esquivel () and Nora Lustig

No 267, Working Papers from ECINEQ, Society for the Study of Economic Inequality

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 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.

Keywords: inequality; wages; disposable income; labour markets; Mexico. (search for similar items in EconPapers)
JEL-codes: D31 J20 J31 O54 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-09
New Economics Papers: this item is included in nep-dev and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Working Paper: The Rise and Fall of Income Inequality in Mexico: 1989-2010 (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2012-267

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