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Place-specific Determinants of Income Gaps: New Sub-National Evidence from Chiapas, Mexico

Ricardo Hausmann (), Carlo Pietrobelli () and Miguel Santos ()

No 343, CID Working Papers from Center for International Development at Harvard University

Abstract: The literature on income gaps between Chiapas and the rest of Mexico revolves around individual factors, such as education and ethnicity. Yet, twenty years after the Zapatista rebellion, the schooling gap between Chiapas and the other Mexican entities has shrunk while the income gap has widened, and we find no evidence indicating that Chiapas indigenes are worse-off than their likes elsewhere in Mexico. We explore a different hypothesis. Based on census data, we calculate the economic complexity index, a measure of the knowledge agglomeration embedded in the economic activities at a municipal level in Mexico. Economic complexity explains a larger fraction of the income gap than any individual factor. Our results suggest that chiapanecos are not the problem, the problem is Chiapas. These results hold when we extend our analysis to Mexico’s thirty-one federal entities, suggesting that place-specific determinants that have been overlooked in both the literature and policy, have a key role in the determination of income gaps.

Keywords: Chiapas; Mexico; economic complexity; development policy; public-private dialogue; internal migrations (search for similar items in EconPapers)
JEL-codes: A11 B41 O10 O12 O20 R00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma
Date: 2018-07
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