Inequality in Mexico: the top 10% of the earners with the highest income captured 59 percent of national income

23/06/2021

Latin America is the second most unequal region in the world after Sub-Saharan Africa, where Mexico, Brazil, and Chile, are the countries with the highest income concentration, and therefore, the highest inequality, according to the Regional Human Development Report of the United Nations Development Programme (UNDP).

Despite decades of progress, the region continues to be the second most unequal in the world, and income inequality in LAC (Latin America and the Caribbean) countries is greater than in other regions with similar levels of development. Inequality, like poverty, is multidimensional and goes beyond income.

Among Latin American countries, Chile, Mexico, and Brazil had the highest income concentration in 2019: 10 percent of the population captured more than 57 percent of national income, and the top one percent, more than 28 percent. In Mexico, the top 10 percent of the population with the highest income captured 59 percent of national income, while the top one percent captured 29 percent between 2000 and 2019.

In contrast, Uruguay, Argentina, and Ecuador had the lowest levels of income concentration in the region between 2000 and 2019, although they remain high in absolute terms, and concentration in Argentina and Ecuador appears to have declined since 2010.

Inequality in Mexico is a product of low growth and lack of investment, while the Federal Government's social programs have not made a difference.

Considering that Latin America is mired in a trap of high inequality and low growth, these phenomena interact in a vicious cycle that limits the ability to make progress on all fronts of human development. Along with high inequality, the region is also characterized by volatile and generally low growth, the result of low productivity.

Another marked characteristic among Latin American and Caribbean countries is the region's high persistence and low mobility that is not limited to education. Data from Brazil and Mexico show that intergenerational occupational persistence is higher in these countries than in the United States.

Low occupational and income mobility may discourage educational mobility by reinforcing the idea of low returns to human capital investments, while high levels of educational attainment may still determine attainment in higher-paying occupations and higher incomes.