Accounting for Mexican Income Inequality during the 1990s

The author implements several inequality decomposition methods to measure the extent to which total household income disparities can be attributable to sectoral asymmetries and differences in skill endowments. The results show that at least half of...

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Bibliographic Details
Main Author:	De Hoyos, Rafael E.
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE EFFECT AGRICULTURAL INCOMES AVERAGE ANNUAL AVERAGE INCOME COUNTERFACTUAL DEBT DECOMPOSITION ANALYSIS DECOMPOSITION RESULTS DECOMPOSITION TECHNIQUES DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVALUATION DEVELOPMENT STRATEGY DISTRIBUTIONAL CHANGES DISTRIBUTIONAL EFFECTS DISTRIBUTIONAL IMPACT EARNING ECONOMIC GROWTH ECONOMIC ORDER ECONOMIC REFORMS ECONOMIC STRUCTURE ECONOMIES OF SCALE EMPIRICAL EVIDENCE EXPECTED VALUE EXPLANATORY VARIABLES EXPORTS FACTOR COMPONENTS FREE TRADE FUNCTIONAL FORM FUTURE RESEARCH GDP GINI COEFFICIENT GROWING ECONOMY GROWTH DATA HIGH INCOME HIGH INCOME INEQUALITY HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD MEMBERS HOUSEHOLD SIZE HUMAN CAPITAL INCOME INCOME COMPONENTS INCOME DIFFERENCES INCOME DISPARITIES INCOME DISTRIBUTION INCOME EQUATION INCOME INEQUALITY INCOME LEVEL INCOME QUINTILES INCOME SOURCE INCOME SOURCES INCOMES INEQUALITY AVERSION INEQUALITY AVERSION PARAMETER INEQUALITY CHANGES INEQUALITY DECOMPOSITION INEQUALITY INDEX INEQUALITY LEVELS INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY TRENDS INTERNATIONAL TRADE LABOR MARKET LABOR MARKETS LORENZ CURVE MACROECONOMIC CONTEXT MACROECONOMIC PERFORMANCE MACROECONOMIC STABILITY MIDDLE CLASS NATURAL DECOMPOSITION NEGATIVE EFFECT NEGATIVE SHOCK PER CAPITA INCOMES PERSONAL INCOME POLICY RESEARCH POOR POSITIVE EFFECT POSITIVE IMPACT POVERTY LINES PRICE CHANGES PRODUCTION FUNCTION PRODUCTION INPUTS REAL INCOME REAL INCOMES REDISTRIBUTIVE POLICIES REGIONAL DUMMIES REGRESSION ANALYSIS REGRESSION RESULTS RELATIVE IMPORTANCE RELATIVE WAGES REMUNERATION REMUNERATIONS SECTORAL COMPOSITION SIGNIFICANT IMPACT SOCIAL DEVELOPMENT SURVEY DESIGN TRADE BARRIERS TRADE LIBERALIZATION TRADE REFORMS UNEMPLOYMENT WELFARE ECONOMICS
Online Access:	http://documents.worldbank.org/curated/en/2007/05/7576039/accounting-mexican-income-inequality-during-1990s http://hdl.handle.net/10986/7078

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Summary:	The author implements several inequality decomposition methods to measure the extent to which total household income disparities can be attributable to sectoral asymmetries and differences in skill endowments. The results show that at least half of total household inequality in Mexico is attributable to incomes derived from entrepreneurial activities, an income source rarely scrutinized in the inequality literature. He shows that education (skills) endowments are unevenly distributed among the Mexican population, with positive shifts in the market returns to schooling associated with increases in inequality. Asymmetries in the allocation of education explain around 20 percent of overall household income disparities in Mexico during the 1990s. Moreover, the proportion of inequality attributable to education endowments increases during stable periods and reduces during the crisis. This pattern is explained by shifts in returns to schooling rather than changes in the distribution of skills. Applying the same techniques to decompose within-sector income differences, the author finds that skill endowments can account for as much as 25 percent of earnings disparities but as little as 5 percent of dispersion in other income sources.

Accounting for Mexican Income Inequality during the 1990s

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