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Inequality in Mexico: Labour markets and fiscal redistribution 1989–2014

Raymundo Campos-Vazquez, Nora Lustig () and Scott John

No 188, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Income inequality in Mexico increased between 1989 and 1994; between 1994 and 2006, inequality declined; and, between 2006 and 2014, inequality was again on the rise.We apply decomposition techniques to analyse the proximate determinants of labour income inequality and fiscal incidence analysis to estimate the first-order effects of taxes and social spending on the distribution of income.The key component that underlies the ‘rise-decline-rise again’ pattern was the evolution of returns to skills. In addition, while changes in fiscal policy in the 1990s were progressive and pro-poor, the redistributive effect has declined significantly since 2010, as transfers have become less progressive and net indirect taxes have increased.

Keywords: Top incomes; Poverty; Fiscal redistribution; Inequality; Labour income (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-lam
Date: 2018
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