The document examines the role of market forces, institutional factors, and public policies in explaining changes in inequality across Mexico. This being said, the authors claim that inequality rose in Mexico between 1989 and 1994, whereas between 1994 and 2010 it declined considerably. Thereby, the document suggests that changes in supply and in demand of the labour force during the 1989-2010 influenced returns in Mexico, hence affecting income inequality levels in the country. Furthermore, the article claims that government transfers contributed to the downfall of inequality in Mexico, especially after 2000. In order to assess these claims, the researchers introduce data provided by the National Survey of Household Incomes and Expenditures for 1989, 1992, 1994, 1996, 2000, 2006, 2008 and 2010.

The document is structured as follows. After a brief introduction, section two provides a general framework on the determinants of inequality levels in Mexico, whereas section three emphasizes on the factors behind income inequality. For its part, chapter four tackles the influence of demand, supply and institutional factors on Mexico’s inequality levels, whilst section five evaluates the linkage between cash transfers and inequality. Finally, chapter six provides some concluding remarks on the subject.

To conclude, the authors claim that three episodes in inequality dynamics in Mexico were identified: a period of rising inequality (1989-94); a period of declining inequality (1994-2006); and a period in which the decline in inequality lost its momentum (2006-10). These dynamics were heavily influenced by both market forces and widespread policy reforms, thus confirming the validity of the authors’ initial hypothesis.

The document is available in English