Wage Shocks and Consumption Variability in Mexico during the 1990s

Miguel Székely and Orazio Attanasio ()

No 4265, RES Working Papers from Inter-American Development Bank, Research Department

Abstract: This paper presents evidence on the relationship between economic shocks to relative male wages and changes in household consumption in Mexico during the 1990s, which is a period characterized by high volatility. In addition to performing this type of analysis for Mexico for the first time, the paper makes two main contributions. The first is the use of alternative data sources to construct instrumental variables for wages. The second is to examine differences across four consumption categories: non-durable goods, durable goods, education and health. Our results for non-durable goods consumption reject the hypothesis that Mexican households are able to insure idiosyncratic risk. For the comparisons across consumption categories, the conclusion is that households in Mexico tend to react to temporary shocks by contracting the consumption of goods that represent longer-run investment in human capital, which makes them more vulnerable in the future.

Date: Written
View list of references View citations in EconPapers

Downloads: (external link)
http://www.iadb.org/res/includes/pub_hits.cfm?pub_ ... e_name=pubWP-451.pdf (application/pdf)

Related works:
Journal Article: Wage shocks and consumption variability in Mexico during the 1990s (2004)
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: http://EconPapers.repec.org/RePEc:idb:wpaper:4265

Access Statistics for this paper

More papers in RES Working Papers from Inter-American Development Bank, Research Department
Contact information at EDIRC.
Series data maintained by Luis Daniel Martinez ().