Experts Dive Deep Into Latest Poverty Trends in Mexico
On September 6, 2023, the Georgetown Americas Institute (GAI) hosted a panel to analyze the latest data measuring poverty in Mexico. The panelists included John Scott, academic counselor of the National Council for Evaluation of Social Development Policy (CONEVAL); Gerardo Esquivel, professor of economics at El Colegio de México; and Luis Felipe Lopez-Calva, director for poverty and equity global practice at the World Bank. Alejandro Werner, director of GAI, participated along with Nora Lustig, a GAI resident fellow who chaired the event.
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Lustig framed the conversation by laying out recent positive and negative trends in the latest poverty data in Mexico. On a positive note, both monetary and multidimensional poverty have not only recovered from the COVID-19 pandemic, but they appear to have fallen below pre-pandemic levels. However, this news is tempered by recent evidence showing a significant decline in access to health care.
In this context, Scott presented statistics on poverty gathered by CONEVAL. Mexico measures poverty using two indicators: one for monetary poverty, which is measured using household income data; the second is multidimensional poverty, using several social indicators such as access to education, health care, food, and housing. According to the latest census, from 2018 to 2022 monetary poverty declined from 41.9% to 36.3%, mostly due to an increase in the minimum wage.
"The Mexican government’s most successful policy regarding poverty reduction has been the minimum wage policy.” -John Scott
On the other hand, about 30 million people reported a lack of access to health care in the same time period due to the latest reform to the public health system that created the Instituto de Salud para el Bienestar (INSABI) and eliminated the previous system. On the other hand, Scott also mentioned the data-gathering challenges that might alter the results of both monetary and multidimensional poverty.
Visualizing the Data
Esquivel proceeded to examine poverty from a regional perspective. He deepened the discussion on the minimum wage and explained that northern states like Chihuahua and Baja California experienced the biggest growth in household income due to an increase in the minimum wage, which has grown around 130% since 2018. He added that southeastern states also experienced a significant increase in household income due to the government’s public investment policy, which focused on that region of the country.
Luis Felipe Lopez-Calva also weighed in on the minimum wage policy, its effect on poverty, and its implications for the Mexican economy. He compared Mexico to Colombia, given that the latter also officially differentiates between monetary and multidimensional poverty. He highlighted that Colombia uses multidimensionality as a tool to advance public policy to target these indicators, while Mexico uses it primarily as a measuring device.
“The decline in monetary poverty came from wage compression explained by a wage decline in jobs for qualified workers, which implies that there is a demand problem for qualified jobs, and that has negative implications for productivity and economic growth.” - Luis Felipe Lopez Calva
Mexico has a long way to go when it comes to the reduction of poverty, especially multidimensional poverty. Alejandro Werner called for a special focus on the lack of access to health care and highlighted the country’s minimum wage policy as an unsustainable resource for tackling poverty because it only addresses one of the multidimensional issues that create poverty.