Growth, inequality and poverty dynamics in Mexico

Alberto Javier Iniguez-Montiel () and Takashi Kurosaki ()
Additional contact information
Alberto Javier Iniguez-Montiel: The University of Tokyo
Takashi Kurosaki: Hitotsubashi University

Latin American Economic Review, 2018, vol. 27, issue 1, 1-25

Abstract: Abstract In this study, we examine the contributions of growth and redistribution to poverty reduction in Mexico during the period from 1992 to 2014, using repeated cross-section household data. We first decompose the observed changes in poverty reduction into components arising from growth, improved income distribution, and heterogeneous inflation. We find the component of inflation to be non-negligible and highly detrimental to the poor, as the inflation experienced by them has been higher than the national average since 2008. The decomposition also shows improvement in income distribution to be the main contributor to poverty reduction in Mexico. In the second part of our analysis, we compile a unique panel dataset at the state level from the household data and estimate a system of equations that characterize the dynamic relationship between growth, inequality, and poverty, being careful to avoid spurious correlation arising from data construction. The GMM regression results show that Mexican states are characterized by income and inequality convergence, that lower levels of inequality tend to spur growth in the economy, that increasing income/consumption levels contribute to reducing inequality, and that poverty reduction is highly determined by inequality levels in the previous period. This implies that once a small perturbation occurs in a state that improves the distribution of income, the state is expected to experience sustained income growth and accelerated poverty reduction simultaneously in subsequent periods.

Keywords: Dynamics; GMM estimation; Growth; Inequality; Poverty; Mexico; C23; I32; O15; O47; O54 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://link.springer.com/10.1186/s40503-018-0058-9 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:laecrv:v:27:y:2018:i:1:d:10.1186_s40503-018-0058-9

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40503

DOI: 10.1186/s40503-018-0058-9

Access Statistics for this article

Latin American Economic Review is currently edited by Susan W. Parker, Kaniska Dam and Gonzalo Castañeda

More articles in Latin American Economic Review from Springer, Centro de Investigaciòn y Docencia Económica (CIDE)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().