Lecture Notes on Inequality in Latin America and Mexico

Introduction

• Thanks to WIDER for invitation and sponsorship.
• Project coordinators: Chico Ferreira, Marie Francois.
• Aim: Include a diverse range of countries (developing, middle-income, advanced economies).
• Countries involved: Brazil, Russia, Indonesia, Mexico.

Historical Context

• Past project (1985): Focus on inequality was limited but has since gained prominence.
• Recent years: Significant increase in research on inequality.

Focus on Latin America

• Research by Mill, Philippe, Raimundo, Chico, Francois on inequality in Latin America.
• Notable contributors: Andrea Corin Drey, Facundo Alvarez.
• Presentation today includes Mexico's results.

Inequality in Mexico

• Observations:
  • Post-NAFTA decline in inequality.
  • Unknown link to US integration.
  • Historical trend: Rise in late 80s, decline from mid-90s.
  • Recent stagnation in the decline trend.

Labor Market Analysis

• Labor income's contribution:
  • Decreasing inequality (2000-2004).
  • Recent increase in inequality rates.
• Other factors:
  • Business income contributing to inequality.
  • Remittances as an equalizing factor.

Data Limitations

• Lack of data on top incomes.
• Analysis does not fully capture top income dynamics.

Decline in Inequality: Hypotheses

• Relative supply of skilled workers increase.
• Institutional factors like minimum wage or unionization.
• Quality of workforce allocation and education.

Analysis of Wages

• Graphs indicate:
  • Increase in college-educated worker supply post-1994.
  • Decline in returns for college-educated workers post-2008.

Factors Affecting Wage Decline

• Cohort analysis:
  • Older workers experience significant wage declines.
  • Young workers maintain or increase wages over time.

Closing Thoughts on Labor Market

• Decline in wage premium despite educational inequality.
• Technology or younger workforce replacing older workers.

Future Research and Considerations

• Lack of top income data may skew inequality understanding.
• Need to explore labor market dynamics and fiscal redistribution further.
• Continuing projects: New project sponsored by WIDER.
• Potential inclusion of top income data: Facundo Alvarez, ongoing research collaboration.