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Cointegration with structural changes between per capita product and income inequality in Mexico

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  • Vicente German-Soto
  • Chapa Cantú

Abstract

The long-run relationship between per capita product and income inequality in Mexico is assessed for the period 1963-2010. The methodology consists of stochastic unit root techniques with structural changes. The integration and cointegration tests suggest that it is not possible to understand this link if the possibility of structural changes is not taken into account. Causality, running from per capita product to income inequality, and a negative and significant overall effect are estimated. However, after the regime shifts - mainly estimated to occur in the 1980s - the connection is no longer meaningful. This result seems to be linked to the slow growth of the Mexican economy after these structural breaks, affecting, in turn, the reductions in income inequality.

Suggested Citation

  • Vicente German-Soto & Chapa Cantú, 2015. "Cointegration with structural changes between per capita product and income inequality in Mexico," Applied Economics, Taylor & Francis Journals, vol. 47(49), pages 5215-5228, October.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:49:p:5215-5228
    DOI: 10.1080/00036846.2015.1044649
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    Cited by:

    1. Obiakor, Rowland & Akpa, Emeka & Okwu, Andy, 2022. "Economic Size, Uncertainty, and Income Inequality in Nigeria," MPRA Paper 113637, University Library of Munich, Germany.
    2. German-Soto, Vicente, 2016. "Un Índice de Desigualdad Regional usando Datos Agregados [A Regional Inequality Index using Aggregated Data]," MPRA Paper 71736, University Library of Munich, Germany.
    3. Kozminski, Kate & Baek, Jungho, 2017. "Can an oil-rich economy reduce its income inequality? Empirical evidence from Alaska's Permanent Fund Dividend," Energy Economics, Elsevier, vol. 65(C), pages 98-104.
    4. German-Soto, Vicente & Gluschenko, Konstantin, 2021. "Long-Run Cross-State Growth Comparison in Mexico," MPRA Paper 109015, University Library of Munich, Germany.

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