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Wage inequality and informality: evidence from Mexico

Wage inequality and informality: evidence from Mexico
Wage inequality and informality: evidence from Mexico

While several studies have documented the expansion of the informal sector and its detrimental impact on development, few have noted that informality and wage inequality tend to move together. Using Mexico as a case study, I show that between 1987 and 2002 wage inequality within informal workers accounted for over 60 % of total wage inequality and that the Mexican financial crisis of the mid-1990s increased the share of informal workers and, via this, wage inequality. The results provide supportive evidence that in Mexico higher wage dispersion is one of the channels through which informality negatively affects development.

Informality, Mexico, Wage inequality
Binelli, Chiara
9c592dc3-5794-423c-8532-c0f82a1c3639
Binelli, Chiara
9c592dc3-5794-423c-8532-c0f82a1c3639

Binelli, Chiara (2016) Wage inequality and informality: evidence from Mexico. IZA Journal of Labor and Development, 5 (1). (doi:10.1186/s40175-016-0050-1).

Record type: Article

Abstract

While several studies have documented the expansion of the informal sector and its detrimental impact on development, few have noted that informality and wage inequality tend to move together. Using Mexico as a case study, I show that between 1987 and 2002 wage inequality within informal workers accounted for over 60 % of total wage inequality and that the Mexican financial crisis of the mid-1990s increased the share of informal workers and, via this, wage inequality. The results provide supportive evidence that in Mexico higher wage dispersion is one of the channels through which informality negatively affects development.

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More information

Accepted/In Press date: 12 January 2016
e-pub ahead of print date: 10 March 2016
Published date: 1 December 2016
Keywords: Informality, Mexico, Wage inequality

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Local EPrints ID: 413512
URI: https://eprints.soton.ac.uk/id/eprint/413512
PURE UUID: 4d55715f-e099-4059-baed-46b2ff6810d8

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Date deposited: 25 Aug 2017 16:31
Last modified: 13 Mar 2019 19:30

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Contributors

Author: Chiara Binelli

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