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Inequality, living standards and growth: two centuries of economic development in Mexico

Bleynat, Ingrid, Challú, Amílcar and Segal, Paul (2020) Inequality, living standards and growth: two centuries of economic development in Mexico. Working Paper (46). International Inequalities Institute, London School of Economics and Political Science, London, UK.

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Abstract

Historical wage and incomes data are informative both as normative measures of living standards, and as indicators of patterns of economic development. We show that, given limited historical data, median incomes are most appropriate for measuring welfare and inequality, while urban unskilled wages can be used to test dualist models of development. We present a new dataset including both series in Mexico from 1800 to 2015 and find that both have historically failed to keep up with aggregate growth: per worker GDP is now over eight times higher than in the nineteenth century, while unskilled urban real wages are only 2.2 times higher, and median incomes only 2.0 times. From the perspective of inequality and social welfare, our findings confirm that there is no automatic positive relationship between economic growth and rising living standards for the majority. From the perspective of development, we argue that these findings are consistent with a dual economy model based on Lewis’s assumption of a reserve army of labour, and explain why Kuznets's predicted decline in inequality has not occurred.

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk/International-Inequalities
Additional Information: © 2020 The Authors
Divisions: International Inequalities Institute
Subjects: H Social Sciences > HN Social history and conditions. Social problems. Social reform
JEL classification: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N36 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: Latin America; Caribbean
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
Date Deposited: 26 Jun 2020 12:39
Last Modified: 20 Aug 2020 23:07
URI: http://eprints.lse.ac.uk/id/eprint/105215

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