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Income Inequality and Government Transfers in Mexico

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  • Frederic Lambert
  • Hyunmin Park

Abstract

We analyze microdata from Mexico's survey on household income and expenditures (ENIGH) to study the evolution of income inequality in Mexico over 2004-16, identify its sources, and investigate how it was affected by government social policy. We find evidence of only a small decline in inequality over this period. The observed decline may be attributed to government transfers, notably targeted cash transfers (Prospera) and non-contributory pensions. In 2016, those two programs accounted for more than two thirds of the reduction in the Gini coefficient due to government transfers. Other transfer programs such as farmland subsidies (Proagro), government scholarships, and non-monetary transfers for medical expenditures have not been as effective.

Suggested Citation

  • Frederic Lambert & Hyunmin Park, 2019. "Income Inequality and Government Transfers in Mexico," IMF Working Papers 2019/148, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2019/148
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    References listed on IDEAS

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    1. Raymundo Campos & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989–2010," Working Papers 267, ECINEQ, Society for the Study of Economic Inequality.
    2. Mr. Mauricio Vargas & Santiago Garriga, 2015. "Explaining Inequality and Poverty Reduction in Bolivia," IMF Working Papers 2015/265, International Monetary Fund.
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    4. Luis Felipe López-Calva & Santiago Levy Algazi, 2016. "Labor Earnings, Misallocation, and the Returns to Education in Mexico," IDB Publications (Working Papers) 93056, Inter-American Development Bank.
    5. John Scott & Enrique de la Rosa & Rodrigo Aranda, 2017. "Inequality and Fiscal Redistribution in Mexico," Commitment to Equity (CEQ) Working Paper Series 65, Tulane University, Department of Economics.
    6. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    7. Raymundo Campos & Gerardo Esquivel & Nora Lustig, 2012. "The Rise and Fall of Income Inequality in Mexico, 1989–2010," Working Papers 267, ECINEQ, Society for the Study of Economic Inequality.
    8. Susan W Parker & Tom Vogl, 2023. "Do Conditional Cash Transfers Improve Economic Outcomes in the Next Generation? Evidence from Mexico," The Economic Journal, Royal Economic Society, vol. 133(655), pages 2775-2806.
    9. Susan W. Parker & Petra E. Todd, 2017. "Conditional Cash Transfers: The Case of Progresa/Oportunidades," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 866-915, September.
    10. López-Calva, Luis Felipe & Levy Algazi, Santiago, 2016. "Labor Earnings, Misallocation, and the Returns to Education in Mexico," IDB Publications (Working Papers) 7454, Inter-American Development Bank.
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    Cited by:

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    2. Matthieu Clément & Lucie Piaser, 2022. "Geography of Income and Education Inequalities in Mexico: Evidence from Small Area Estimation and Exploratory Spatial Analysis," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(2), pages 703-732, April.

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