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From issue: The Economic Crisis: What is Next? (Spring 2009)

AQ Feature

Mexico's Fragile Middle Class

Florencia Torche

The recession could prod Mexico into policies that protect its new middle class while tackling intergenerational poverty.

Can Latin American governments tackle inequality in the midst of the global economic downturn? Although some countries—most notably Brazil and Chile—have made dramatic gains in reducing poverty and expanding the middle class, Latin America remains, in the first decade of the twenty-first century, one of the world’s most unequal regions. Inequality has deep roots in the region’s colonial history and institutions, but a major driver of today’s income gap is the uneven access to public goods such as education. Unequal access to education and other productive assets is not only the source of wide economic disparities, but it also prevents intergenerational mobility.

Examining the case of Mexico can help us find ways to understand this phenomenon. The gap between the rich and the poor in Mexico has remained largely unchanged over the past two decades. Recent studies about intergenerational mobility indicate that public support for education, especially for the most needy, is the key to providing equal opportunity. The lesson is applicable to the entire region, particularly if it is to shore up and defend the social gains of the last decade in the midst of an economic crisis.

Intergenerational mobility captures the extent to which an individual’s socioeconomic position depends on social background. In an immobile society, “accidents of birth” strongly determine individual attainment. In a mobile society, by contrast, the opportunity for economic success (and failure) will be more equally distributed across individuals of different social backgrounds. As such, mobility provides a measure of equality of opportunity across countries.

Even though mobility and inequality are correlated—higher levels of inequality mean that parental resources weigh more on individual attainment— mobility matters in and of itself for at least three reasons. The first of these is normative. A society that fails to value equal opportunity and merit over social background and economic status is simply unjust. Social mobility also matters from an efficiency perspective. A social and economic system that does not reward individual merit wastes its most precious resource: human capital and its corresponding potential for innovation. Finally, immobility threatens social integration and can lead to social conflict...

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