Chapter Nine: |
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This chapter is an analysis of the recently published information from the Encuesta Nacional de Ingresos y Gastos de los Hogares (INEGI, 1989, 1992)[1]. The analysis looks at the changes that occurred in income distribution between 1977 and the first trimester of 1984, (Cortés and Rubalcava, 1991) and then compares the distribution of 1984 with that of 1989. We seek to establish the link between the economic strategies employed by the Mexican administration in each period to see their effects on household income distribution.
We begin with a review of the economic variables which have the strongest influence on income distribution. Then, in the section entitled "The Inequality in the Distribution of Income between 1984 and 1989", the value of the Gini indicators for the third trimester of 1984 and 1989 are presented, calculated on the basis of household income distributions by deciles as they appear in the publication of the INEGI, along with their corresponding Lorenz curves. Next we discuss the adjustments on the data before the statistical analysis. In the fourth section an analysis of the changes in total household income and its sources, and the decomposition of the variance is carried out. The interpretation is left for the fifth section. It includes a brief methodological discussion before laying out our interpretation of what happened to household income distributions between 1984 and 1989.
In the conclusion we try to understand what the consequences arise from substituting an open export driven model of economic development for the closed import substitution model, as well as our interpretation of the changes in household income distribution between 1984 and 1989.
The macroeconomic framework
In this section, a rough sketch is drawn of some of the macroeconomic transformations which occurred in Mexico in the 1980s. The intention is not to present an exhaustive analysis of the evolution of the economy. Our aim is much more modest since it only tries to sketch the most important influences on household income distribution between 1984 and 1989.
For analytical purposes there should be a distinction made between two distinct periods of the economic transformation of Mexico , the first 1982-86 marked by a policy of stabilization and adjustment and the other, from 1986 to the present by a policy of structural change (Nelson 1990: 3 - 4).
The first period begins in August 1982 with the announcement of a stabilization and adjustment policy which was designed to deal with the drop in oil prices, to control inflation and to reduce the deficit of the balance of payments. It operated by reducing the fiscal deficit, and lowering salaries (Cortés and Rubalcava, 1991: 12 - 13)[2].
In 1986, oil prices deteriorated again, reducing the value and the volume of oil exports (Banco de México, 1987: 17). The decision was taken to discontinue the orthodox policy and institute a regime of controlling public finances, restricting credit, and permitting the exchange rate to float. In the words of the Banco de México the structural adjustment policy was designed to reduce "the quantitative controls on imports and secure the entrance of Mexico into GATT. It would encourage foreign investment in those sectors which improve national technological resources, add to exports, encourage tourism and, in general, promote the productivity and efficiency of enterprises" (Banco de Mexico, 1987: 18). These measures were a dramatic step beyond the stabilization and adjustment policy of earlier years as Mexico developed a policy of structural change. The Bank of Mexico planned it in the following way: "the economy was opened to international competition, [which was] a key aspect of the structural reform, and a Protocol of Adhesion to the GATT was signed" (Banco de Mexico, 1987: 21). The new model sought growth based on the international market. It began by reorganizing the productive structure using the prices in the different markets as signals[3].
On December 16, 1987, one day after the announcement of the rise in prices of goods and services in the public sector, the Economic Solidarity Pact (or PACTO) was signed with the objective of lowering inflation. The Pact outlined four initiatives: 1) the reordering of public finances, (2) the restriction of credit to reduce aggregate demand, (3) opening of the economy in order to compel producers to work to international standards and, (4) a commitment by the public sector to contain price increases (Banco de México, 1988: 30). Judging by the behavior of wages and prices, the Pact was more effective in restraining wages than in controlling prices.
A second program for economic stabilization was initiated in December 1987, this time within the framework of the structural change policy, consistent with the Economic Pact, using the same strategy of getting public, private and labor sectors to the bargaining table. [4]" It succeeded in reducing the average monthly inflation rate of 8.2% in 1987 to 1.0% in 1988 despite the absence of foreign financial support and the decline of international oil prices (Banco de México, 1990: 17).
In 1990 the model for structural change was complete. As the Banco de México stated: "The strategy of the current administration is to emphasize that sustainable economic growth can not take place with high inflation, and even less, under conditions of economic instability. Development requires higher levels of saving, investment and productivity" (Banco de México, 1991: 3).
The economic policy of the Salinas administration followed the logic of the new model in that the role of the State in the economy was reduced, an efficient allocation of resources through the market attained, and a balance among private enterprise, the needs of the public sector and wage demands became an explicit policy aim. (Banco de Mexico, 1991: 3-8).
Manufacturing wages did not decrease substantially in 1988. The opening of the economy to international competition caused changes in the productive structure (Rendón and Salas, 1991: 11), which were translated into increases in productivity, which restrained wage declines.
Research done in the northern border region illustrates that, after the 1982 crisis, structural change took place in the maquiladora industry which is marked by the entry of larger scale enterprises, especially in electronics and auto parts which were no longer assembly plants but real manufacturing centers (Ramírez and González Aréchiga, 1989: 40). Increases of investment in the maquiladoras increased productivity 11.9% annually during these years according to Ramírez and González Aréchiga, 1989: 111 - 112). This, together with location decisions designed to take advantage of the availability of a skilled and professional male labor force increased the proportion of men in the maquiladora work (Carrillo 1989: 49; Quintanilla 1991:67). Interestingly, neither the PACTO, nor its successor, the PECE (Pact for Economic Growth) have had much success in restraining maquiladora wages perhaps because of the low rate of unionization in the maquiladora industry of the northern border region[7].
The distribution of disposable income shows that between 1982 and 1983 the gap between the share of GDP going to wages and that going to "profits" increased in favor of profits.[8] This fact should not lead to the conclusion that the rich had more and the poor less, since profits-share includes not only property income and managerial salaries but also the wages of non-salaried workers. (SPP, 1981: 20) that in large part are in the informal sector. Moreover, all estimates lead to the conclusion that in the years immediately before 1982 , the informal sector increased rapidly in the years after 1982 according to all estimates. (CESSP, 1986; Marquez 1988: 38 - 44).
The situation appears to have changed in the last five years of the eighties. Graph 2 shows that between 1985 and 1986 the proportions of GDP going to profits and to wages both increased, as a consequence of the reduction of public sector expenditures. From 1987 on wages of salaried workers decreased dramatically, at the same time as the proportion of GDP going to profits kept rising. According to the Survey of National Income and Expenditures this process continued through 1989. The elimination of inefficient enterprises was marked during the latter period and these three changes makes one suspect that the situation in 1987-1988 was qualitatively distinct from the period of 1982-1983. In the later period enterprises generated profits by increasing value added, and firms that did not do so became increasingly uncompetitive.
Graph 3 shows federal expenditures in thousands of millions of 1978. In 1982 social expenditures (education, health and social security) reached their maximum. In 1989 they had not yet reached the levels of 1981, although they were slightly higher than in 1985. These figures show that the individual's "indirect wage" (value of state supplied goods and services) was reduced by 22% between 1982 and 1989. However, there are signs of recovery by 1986, after which social spending starts slowly and systematically to increase, in absolute as well as per capita terms. The results of the analysis show that indirect wages of an important part of the population was reduced and most likely of the poorer people [9].
Another element of the economic policy of the period which altered household income distribution was the development of financial markets. During the eighties the state was particularly active in this market in instruments like Pagafés, Bondes and Bondis. This activity increased interest payments significantly. After a pause between 1983 and 1985, federal interest payments rose to the point when in 1987 they were almost 20% of the GDP, as one can see in Graph 4.
The inequality of household income distribution between 1984 and 1989
During the period from 1973 to 1977 the household income became more equally distributed as expressed in the declining Gini indices (Altimir, 1982: 155)[10]. Between 1977 and 1984, according to the Ministry of the Budget (SPP), the index continued to fall: it went from 0.488 in 1977 to 0.469 in 1984 (INEGI-SPP, 1986: 88-89). Other estimates show that the index in 1977 was between 0.496 and 0. 462 and in the first trimester of 1984 between 0.477 and 0.460 (Hernández Laos 1989: 17, 34). The different estimates reflect the different methods used to that make the data sets comparable to the national accounts.
Depending on the estimates that were considered, the Gini coefficient in 1984 is a bit less than or equal to that of 1977, in spite of the dramatic fall in workers' wages in 1983. With the available information it is impossible to state, even though frequently it is stated, that household income inequality was greater in 1984 than in 1977. The data from the ENIGH for the last trimester of 1983 and the four trimesters of 1984 do not support this allegation. The data from the national accounts will not support the proposition of greater inequality either, (for the reasons given in the last section). Furthermore, given that the Lorenz curves for 1977 and 1984 intersect, it is impossible to conclude whether or not the level of well-being increased or decreased in the period (Atkinson; 1975: 47).
In the specialized literature, it is well-known that the rough figures of the ENIGH exhibit different degrees of underreporting depending on differences in the calculation of income sources (Bergsman, 1980; Altimir, 1982). Wages cause less bias than profits from business and rents, so that the inequality measured by the results of the surveys tends to be greater than the value of the Gini coefficient would indicate. For example, the Gini coefficient that was calculated in this work for 1984 is clearly lower, indicating less inequality, than the one calculated by Hernández Laos (0.43 versus 0.46 or 0.48). Therefore, the Gini indexes calculated using the total household income distribution by deciles as its base are minimal estimates of the level of inequality. And this inequality is exacerbated by the decline in the contribution of wages to GDP, as compared to profits.
It should be noted that for this analysis the survey data were not disaggregated, which makes the estimates less reliable. The high level of aggregation of the data causes an underestimation of inequality (Cortés and Rubalcava, 1982: 114), and the use of total household income and not per capita household income underestimates the consumption needs of larger households. In the following section we will break down household income by sources to determine what changes took place so as to increase inequality from 1984 to 1989.
The data
Since the only data available for comparative purposes from 1989 was the third quarter of the ENIGH, we will use the data from the same quarter of 1984 in order to make the comparison, in an attempt to minimize the effect of seasonal variation.
In order to analyze the changes in the contribution of different income sources, Table 10 of the chapter "Distribution of current total of household income, monetary and non-monetary", from the ENIGH publications (INEGI, 1989 & 1991) was used.
In order to deflate these figures, the simple average of the third quarter of the Indice Nacional de Precios al Consumidor por Estrato de Ingreso (Banco de México; 1990) was used, with incomes expressed in 1978 pesos. We used the index of the low stratum for income in the first to seventh decile, that of the middle stratum for the eighth and ninth decile and that of the high stratum for the tenth decile. Incomes classified as "other incomes" were excluded, given that they are not, properly speaking, incomes at all.
We treated monetary gifts between households in net terms according to the net gain and net loss to the household in question. Unfortunately, the pertinent information for expenditures is not organized so that the net value of monetary transfers can be calculated with the result that data on transfers is an overestimation.
Lastly, the headings of "business profit" and "income from production cooperatives" is included under the single heading of "business profit".
Once these adjustments were made, the average real monthly monetary income per household, by decile and by source of income was calculated. In order to get these figures, the total incomes (Totinc) by quarter, collected as remuneration for work (Wages), business profit (Profit), property income (Rents) , transfers (Transf) and non-monetary income (Nonmon), were divided by three times the total number of households that corresponded to each decile. As a result, the deflated figures of the third quarter of 1984 were divided by 4,496,565 (3*1,498,855) and those of the third quarter of 1989 by 4,786,659 (3*1,595,553).
Tables 1 and 2 give the results.
[ Table 1 goes in here]
In the third quarter of 1984 minimum monthly salary was $2,031.40 (1978 pesos) and each decile includes 1,498,855 households.
[Table 2 goes in here]
In the third quarter of 1989 the monthly minimum salary was $1523.4 (1978 pesos) and each decile includes 1,595,553 households. Besides calculating income by source, total income by household, for each decile, in 1978 pesos and its equivalent in minimum salaries (Minsal) was calculated.
The increase in inequality in income distribution: an analysis by sources
Table 3 synthesizes the changes income distribution experienced by decile, according to the different sources of income.
[Table 3 goes in here]
Between 1984 and 1989 total income of the first to seventh deciles increased between 3% and 8%. The eighth and ninth improved in real terms more than 10% and the tenth almost 40%.
In Graph 6 [editor's note: Graph 6 is missing from the original] one can see that the increase in the level of inequality in 1989 in relation to 1984 basically originated in the increase of total incomes that favored the families with more resources. The large increase in this last decile is essentially given by profits, rents and non-monetary incomes. In the ninth decile, it is created mainly by profits and non-monetary incomes; and from the eighth decile down, the increase in income comes from the wages (see Graphs 1 to 5). The big variations in profits should be taken with caution, especially in the deciles of lower incomes, due variability in the figures.
The relative importance of wages increased during this period from the first to eighth decile. In the ninth there is almost no difference, and there is a decrease in importance of wages in the tenth decile. The contribution of profits decreased in the first eight deciles and increased in the last two. The remaining components basically did not change.
The changes already mentioned can be summarized by decomposing the variance and noting the difference between the two years
[Table 6 goes in here]
The coefficient of variability for 1989 is larger than that of 1984 as is the Gini coefficient, which indicates the greater concentration household income by 1989. The Gini coefficient for 1984 is 0.43, and for 1989 it is 0.47. It is important to note that the increase in the total variance primarily originates in the covariance of profits and of non-monetary incomes, and secondly in the increase of inequality in profits, wages and non-monetary incomes.
These changes are seen more clearly if we eliminate the distortion which the order of magnitude of the figures induces and standardize them, as in Table 7.
[Table 7 goes in here]
The structure of change in the variance/covariance matrices between 1989 and 1984 is very different than between 1984 and 1977 when almost all the changes were caused by wages, either by themselves or covarying with non-monetary income and monetary transfers (Cortés and Rubalcava, 1991: 39-44).
The changes of the earlier period, 1977-1984 showed the effects of the stabilization and economic adjustment policy on wages. In contrast, the changes in household income distribution in the period 1984-89 derive from profits, rents, and non-monetary incomes, as well as the covariances among these three sources.
In the later period, 1984-89, overall inequality has been caused by a significant rise in non-monetary incomes in the highest decile. This reflects the increasing importance of home production in this period, and the relatively greater influence of imputed rent in the case of a loaned or borrowed house in the higher deciles (Table 8).
The increase of the covariances in 1989 with respect to 1984 (all the differences are positive) indicates that the relationship between the sources of household income were stronger in 1989. Judging from Table 8 the relationship between profits and remaining sources of domestic income was stronger and the relations among between non-monetary income, rents and transfers strengthened as well.
Up to this point we have sketched a statistical description of the major changes in the sources of household income distribution. We now go on to attempt an explanation based on the macroeconomic changes that have taken place in the two periods and on the stratification of households constructed in a previous study (Cortés and Rubalcava, 1991: 62-63).
Explanation
The Encuesta de Ingresos y Gastos was done in the third quarter of 1984; it took place approximately two years after the stabilization and adjustment policy was put into practice. The survey of the third quarter of 1989 was carried out three years after the structural change policy was declared.
The strategic timing of these measurements allows us to analyze changes in household income distribution in the context of macroeconomic transformations and to speculate on possible effects of the creation of household budgets.
The explanation that follows is based on the assumption that the most important changes that were created in household income distribution between 1977 and 1984 were a result of the stabilization and adjustment policy and that between 1984 and 1989 changes were principally due to the policy of structural change.
We are essentially using a nonexperimental design whose main weakness is that it can not be controlled for historical nor maturity effects (Campbell and Stanley, 1979: 20-28). This is to say, the design is incapable of eliminating the impact on the dependent variable of other variables that occurred during the period (third factors) , nor can we disaggregate the effect of distributional changes.
During the period of 1977-1984 the most important changes in household income distribution originated in wages. The dramatic decline in wages in 1983 meant that domestic groups tried to offset their income losses by fuller exploitation of the potential labor power of their own household.[11]
During 1984-89, for the first time since statistical information for measuring income inequality has been available, there was an increase in the concentration of income. The analysis by deciles showed that the tenth decile has the main "responsibility" for concentrating income, followed by the ninth. The disaggregation of income changes by sources in the top 10 percent of households shows that profits, rents and non-monetary income carry the most weight (See Table 3). These three components account for 57% of the income in the tenth decile (see Table 5). This information is consistent with the importance of profits in the generation of income in 1989. But, it has already been pointed out that "profits" includes income generated by self-employment which means that the cannot absolutely affirm that this increase were produced by capitalist investments.
In 1987 the policy for structural change was put into practice which brought about the liberalization of the market, the elimination of subsidies, and the encouragement of competition to increase efficiency of production. These transformations inaugurated the elimination of uncompetitive firms and industries by natural selection.
It is not strange then, that between 1984 and 1989 profits decreased in the deciles from the eighth on down, only moderately rising in the ninth and strongly, only in the tenth.
Rents (property income) bears examination. The vast preponderance (93%) of rents are earned by renting of houses and buildings (43%) and interests on fixed term investments (50%). Table 4 and 5 show that rents were an insignificant income source in 1984, and that in 1989 they were only important for the tenth decile.
Rents express the earnings the owners of houses and buildings and, partly, the earnings that are generated in the financial markets, which last were stopped by the stock market crash of 1987.[12]
Non-monetary income only changed significantly in the tenth decile, as a result of imputed rent increases. For the moment we do not have information that allows us to dig deeper into the processes that explain this. It would be necessary to look in several directions: the building of homes and luxury buildings, in the principal cities of Mexico; the possible rise in the value of the buildings in real estate assessments, and the increases in the prices of urban land and construction.
The last important factor that explains the changes in the distribution of household income in 1989 with respect to 1984 is wages. In general all the deciles increase the contribution of wages to their incomes. At first glance this result would seem to be contradictory given the fall of the minimum salary, but one should remember that the measurement refers to total household income, that is to say, that produced by the contributions of all members of the household.
The contribution of wages increases in the lower deciles as a consequence of the household strategy to intensify the use of available labor force (Selby , Murphy and Lorenzen: 1990). Salaried workers for modern industry (those of higher productivity and efficiency), which is one of the social sectors that has recovered part of its purchasing power since 1988 are found in the eight decile and it increased the contribution of wages to total household income by 26%. The ninth and tenth deciles show the lowest increases in the contribution of wages and salaries. This is probably due to the fall in real terms of salaries of professionals, and to the loss experienced by the salaries of small businesses that were not protected by the increases in salaries of the higher level government functionaries, managers and high-level technicians (Cortés and Rubalcava, 1991: 62-63).
In order to understand the significance of the increase of the covariance in 1989 with respect to 1984 it is convenient to use business profit as a base. From the lower deciles to the higher ones profits tend systematically to increase except in the ninth and tenth decile, which reduction in importance is even more noticeable in 1989. Nevertheless, the changes that were unleashed as a consequence of the opening of the economy to the international market, increased the contribution of profits, rents and nonmonetary income, which is statistically expressed in the relatively high covariance among these three variables.
Conclusions
As a result of the stabilization and adjustment policy of 1982 households reacted to reduced incomes by putting more members into the work force, changing patterns of consumption, intensifying their labor, renting land or part of their living spaces, sending members to work in other places in Mexico to foreign countries. The structural change policy put into place after 1987 brought with it an increase in the inequality of household income distribution[13] that was essentially derived from profits.
Darwinian selection introduced by the competition in the market, favored industries with high levels of productivity that generated higher profits and better salaries. The development of financial markets, along with the proliferation of financial instruments and the growth in the importance of the stock market, produced higher interest earnings that favored the higher strata. With the increase in apartment and office rents, these same sectors saw their rental incomes increase. The higher earnings enjoyed by businesses, nonsalaried professionals, high level technicians, managers etc. substantially increased their share of the pie, which translated into greater inequality in 1989.
These processes manifested in an increase in the concentration of industrial profit, non-monetary incomes, wages and in smaller part, in rents.
By 1989 income was concentrated in rich families. It would appear that Mexico is beginning to follow the path of the United States, England and Germany, countries in which first income concentration took place which only began to redistribute after 1920 (Kuznets 1965: 260).
Voices have been raised to sustain that the relation between inequality and economic growth is not mechanical (Myrdal 1975: 149-150), among them that of Kuznets who states (1965:284):
There is a danger in simple analogies; in arguing that just because there was an unequal distribution of income in western Europe which produced savings sufficient for the formation of the capital base, it is necessary to produce inequalities in underdeveloped countries in order to assure the same result. Even putting aside the implications of this policy for low income groups we can find that in at least some of these countries today the consumption propensities of higher income groups are themselves higher and the propensity to save lower than the more puritan wealthy of the currently developed countries. It is dangerous to argue that completely free market and tax systems of very low progressivity, however much they may have favored past development are indispensable for economic growth in currently underdeveloped countries. Under current conditions the results may be completely the opposite - it could imply the withdrawal of investment funds into safe havens, whether through capital flight or real estate investments, or the inability of government to act as the fundamental agent of capital formation which is necessary for economic growth.
On the other hand CEPAL (1992) argues that "A monist vision will insist that there exists an incompatibility between growth and equity, but that is merely a question of time, and that growth is a necessary condition for the redistribution of its proceeds to the common people. But there is abundant evidence in the region which allows us to question the validity of this thesis, which has been pejoratively characterized as "trickle-down economics".
The experience of Mexico is relevant for the past years. The stabilization model that was changed in 1986 set the goal of satisfaction of basic needs without changing the underlying economic structure. The conclusion that could be drawn was that the less the economic effort to meet this goal, the greater the equality in the distribution of income. (Hernández Laos and Parás, 1991).
Altimir Oscar, (1982) "La distribución del ingreso en Mexico 1950-1988", in Banco de México, Distribución del ingreso en Mexico, Serie análisis estructural, Mexico.
Atkinson A. (1975) The Economics of Inequality, Oxford, Clarendon Press.
Banco de México (1991) Informe Anual 1990, Banco de México, México, 1991.
Banco de México (1989) Informe Anual 1988, Banco de México, México.
Banco de México (1991) Indicadores Económicos, Dirección de Investigación Económica: III-4.
Bersman J. (1980) "Income distribution and poverty in Mexico", Working Paper No. 395, World Bank, Washington, D.C., 1980.
Campbell D. and Julian Stanley (1979) Diseños experimentales y cuasiexperimetales, en la investigación social, Amorrortu, Buenos Aires, 1979.
Carrillo, Jorge (1989) "Transformaciones en la industria maquiladora de exportación", in González Aréchiga Bernardo y Rocío Barajas Escamilla (eds.), Las maquiladoras: ajuste estructural y desarrollo regional, El Colegio de la Frontera Norte/Fundación Friedrich Ebert, Mexico, .
CESSP La economía subterránea en Mexico (1986) Centro de Estudios del Sector Privado, México.
Comisión Económica para América Latina y El Caribe (CEPAL) (1992) Sociedad y transformación productiva: Un enfoque integrado, Naciones Unidas, Santiago de Chile.
Cortés, Fernando and Rosa María Rubalcava (1982) Técnicas estadísticas para el estudio de la desigualdad social, El Colegio de México, México.
Cortés Fernando y Rosa María Rubalcava (1991) Autoexplotación forzada y equidad por empobrecimiento, Jornadas 120, El Colegio de México, México.
El mercado de valores No. 47, November 24, 1986.
Hernández Laos, Enrique (1990) "México en la primera década del siglo XXI: las necesidades sociales futuras", en José Blanco y Gilberto Guevara Niebla (eds.) Universidad y Economía, UNAM, México.
Hernández Laos, Enrique and Margarita Parás, "Tendencias recientes en la distribución del ingreso en México (1977-1984), in La economía mexicana actual: pobreza y desarrollo incierto, UAM-Iztapalapa, México, 1991.
INEGI-SPP ( 1986) (Instituto Nacional de Estadística Geografía e Informática) Encuesta Nacional de Ingresos y Gastos de los Hogares, Tercer trimestre de 1984, INEGI, México.
Instituto Nacional de Estadística Geografía e Informática (INEGI) (1992) Encuesta Nacional de Ingresos y Gastos de los Hogares 1989, INEGI, México, 1991.
Kuznets Simon (1965) "Economic Growth and Income Inequality", in Economic Growth and Structure: Selected ESsays, W. W. Norton, New York.
Márquez Carlos, (1988) La ocupación informal urbana en México: un enfoque regional, Fundación Friedrich Ebert, México.
Mydral Gunnar (1975) La pobreza de las naciones, Siglo XXI, México.
Nelson Joan (1990) "Introduction: The Politics and Economic Adjustment in Developing Nations:, in Joan Nelson (ed.), Economic crisis and policy choice: the politics of Adjustment in the Third World, Princeton University Press, Princeton.
Quintanilla E. "Tendencias recientes de la localización en la industria maquiladora". in Comercio Exterior, Vol. 41, Num. 9, México September, 1991.
Ramírez José Carlos and Bernardo González Aréchiga (1989) "Productividad sin distribucíon: cambio tecnológico en la maquiladora mexicana (1980-1986)", en Frontera Norte 1, El Colegio de la Frontera Norte, Vol. I, Num 1, Meexico.
Rendón Teresa and Carlos Salas (1991) "El mercado de trabajo no agrícola en México. Tendencias y cambios recientes:, paper presented at the Seminario Mercados de Trabajo: una perspectiva comparativa, tendencias generales y cambios recientes.
Selby Henry A., Arthur D. Murphy and Stephen A. Lorenzen (1990) The Mexican Urban Household: Organizing for Self-Defense, Unversity of Texas Press, Austin.
SPP (1981) El ABC de las Cuentas Nacionales, México.
Average real monthly income per Household by Decile and Source(Thousands of Pesos for 1978, 3rd Quarter of 1984)
Decile Wages Profits Rents Transf Nonmon Totinc Minsal
I 288 269 012 095 294 957 471
II 612 414 024 199 481 1,730 852
III 1,037 548 008 184 566 2,343 1,153
IV 1,386 701 047 182 646 2,962 1,458
V 1,632 802 057 292 781 3,564 1,754
VI 2,239 877 013 358 893 4,379 2,156
VII 2,676 1,224 056 303 1,157 5,416 2,666
VIII 3,177 1,514 174 397 1,336 6,597 3,248
IX 4,767 1,473 247 484 2,088 9,058 4,459
X 7,687 4.,331 843 1,040 3,308 17,210 8,472
(Thousands of Pesos for 1978, Third Quarter of 1989)
Decile Wages Profits Rents Transf Nonmon Totinc Minsal
I 355 241 7 112 315 1,029 676
II 792 389 012 161 471 1,825 1,198
III 1,227 429 029 167 579 2,432 1,596
IV 1,584 527 018 256 688 3,074 2,018
V 2,038 662 043 224 873 3,839 2,520
VI 2,528 816 037 302 1,056 4,738 3,110
VII 3,212 1,019 049 356 1,203 5,839 3,833
VIII 4,006 1,219 093 429 1,713 7,460 4,897
IX 5,420 1,831 123 555 2,283 8,211 6,703
X 8,777 6,6868 1,349 1,303 5,348 23,644 15,521
I 123.1 89.7 55.0 117.6 107.4 107.5
II 129.3 94.1 48.7 81.1 98.0 105.5
III 118.3 78.3 346.6 90.9 102.4 103.8
IV 114.2 75.3 39.1 140.8 106.6 103.8
V 124.9 82.5 74.6 76.9 111.8 107.7
VI 112.9 93.0 281.5 84.3 118.4 108.2
VII 120.0 83.2 87.5 117.4 104.1 107.8
VIII 126.1 80.5 53.5 108.1 128.2 113.1
IX 113.7 124.3 49.8 114.6 109.4 112.7
X 114.2 158.6 160.0 125.2 161.7 137.4
Table 4
Percentage Participation of different Sources of Household Income, Decile Wages Profits Rents Transf NonmonBy Deciles, 3rd Quarter, 1984
I 30.1 28.1 1.2 9.9 30.7 100.0
II 35.4 23.9 1.4 11.5 27.8 100.0
III 44.2 23.4 0.4 7.9 24.1 100.0
IV 46.8 23.7 1.6 6.1 21.8 100.0
V 45.8 22.5 1.6 8.2 21.9 100.0
VI 51.1 20.0 0.3 8.2 20.4 100.0
VII 49.4 22.6 1.0 5.6 21.4 100.0
VIII 48.2 22.9 2.6 6.0 20.2 100.0
IX 52.6 16.3 2.7 5.3 23.0 100.0
X 44.7 25.2 4.9 6.0 19.2 100.0
Table 5
Percentage Participation of different Sources of Household Income, Decile Wages Profits Rents Transf NonmonBy Deciles, 3rd Quarter, 1989
I 34.5 23.4 0.6 10.9 30.6 100.0
II 43.4 21.3 0.6 8.8 25.8 100.0
III 50.4 17.7 1.2 6.9 23.8 100.0
IV 51.5 17.2 0.6 8.3 22.4 100.0
V 53.1 17.2 1.1 5.8 22.7 100.0
VI 53.3 17.2 0.8 6.4 22.3 100.0
VII 55.0 17.4 0.8 6.1 20.6 100.0
VIII 53.7 16.3 1.3 5.7 23.0 100.0
IX 53.1 17.9 1.2 5.4 22.4 100.0
X 37.1 29.0 5.7 5.5 22.6 100.0
Table 6
Difference between the Variance/Covariance Matrices of 1989 Minus 1984 Wages Profits Rents Transf Nonmon
Wages 1.329 3.811 0.646 0.499 2.974
Profits 2.260 0.924 0.670 3.387
Rents 0.102 0.128 0.655
Transf 0.045 0.507
Nonmon 1.254
Difference between the variances: 19.189
Difference between the coefficients of variability: 0.7041
Table 7 Wages Profits Rents Transf NonmonRelative Differences between Variance/Covariance
(3rd quarter 1984 as Base)
Wages 0.294 0.845 0.673 0.477 0.808
Profits 1.857 1.741 1.204 1.829
Rents 1.650 1.072 1.639
Transf 0.696 1.182
Nonmon 1.661
Table 8
Percentile Composition of Non-monetary Income (3rd Quarter 1989) Decile Home Production In Kind Gifts Rents (Est.) Total
I 34.5 2.4 18.6 44.5 100.0
II 32.8 3.2 17.3 46.7 100.0
III 23.3 4.7 21.0 51.1 100.0
IV 20.5 4.3 17.9 57.2 100.0
V 15.2 7.4 20.6 56.7 100.0
VI 13.6 8.9 16.8 60.7 100.0
VII 11.6 7.8 15.7 64.9 100.0
VIII 5.7 10.5 23.4 60.4 100.0
IX 5.5 12.0 17.3 65.2 100.0
X 3.2 10.1 19.0 67.8 100.0
[1] This information does not grasp wealth but, as the methodological information of the ENIGH indicates: "the resources that daily satisfy the needs of the household".
[2] This was the period called "orthodox response" in Chapter 1. [Editor's note]
[3] In November of 1986, the Secretary of Energy, Mines and Parastatal Industry, appearing in front of the House of Representatives issued the statement: "This strategy has appeared as an answer to the exhaustion of the traditional pattern of industrialization of Mexico which was oriented to the internal market through import substitution. [The old model] protectionist scheme which had been in existence since the forties, [had had its successes in creating] an important and diversified industrial base, the second in Latin America, but [suffered from] low levels of integration and international competitiveness.
The new model is aimed at four goals: 1) converting industrial branches so that they are competitive in the world market, 2) building the forward and backward linkages necessary for a national economy, 3 modernizing the industrial plant and 4) creating high technology industries (El mercado de valores: 1986).
[4] A very cumbrous way of translating "concertación social" [Translator's note].
[5] This index is caluclated by applying the average increase of the contractual salaries in the subsequent years to a sample of collective contracts. (Salinas de Gortari C., 1991: 336).
[6] Average wages are obtained from the Monthly Industrial Survey.
[7] This apparently paradoxical statement correctly implies that the unions serve to restrain wage demands, not to intensify them, as might be expected in the US. [Translator's note].
[8] The term "profits"is used to translate "excedente de explotación". As the authors point out in the conclusion of this paper, the use of the terms "labor" and "capital" are misleading in thee sense that the "exedente de explotación" includes income earned by own-account workers, most of whom would not be considered part of the "capitalist class". [Translators note]
[9] Because there are vaious elements that make it difficult to protect low income groups from the cost adjustment, a priority of the government is to adjust and allot public resources to combat poverty, in which these funds can support programs that clearly identify the benefits and recipients of the resourses (Lustig N., 1991: 103 - 104)
In December, 1988 at the inauguration of his government, President Carlos Salinas established a National Solidarity Program that in 1989 operated with an estimated budget of 680 million dollars, the equivalent to 2.1% of the estimated costs of the federal government (Dresser D., 1991:7), which in part compensates for the fall in social spending. However, it is not possible to know which part of the expenditures of this program is properly social considering that it includes support to production and foundation projects.
[10] The higher the value of the Gini index, the greater the inquality of the income distribution.
[11] Details of what occured during 1977 and 1984 can be foundin Cortes F. and Rosa Maria Rubalcava, 1991.
[12] Which lost 60% of its value in the month of August of that year. (Editor's note).
[13] It should not be forgotten that the estimate that is presented in this study is minimal. What is more likely is that the process of concentration is higher than what is reported here.