The widening income gap in Mexico; the rich earn 26 times more than the poor

 Updates to Geo-Mexico
Dec 202011
 

A recent OECD (Organisation for Economic Cooperation and Development) study – “Divided We Stand: Why Inequality Keeps Rising” – shows that in the last 25 years, the “real” (adjusted for inflation) income of the richest 10% of Mexican households has risen by 1.7%, compared to only 0.8% for the poorest 10% of  households.

The gap between rich and poor for OECD members is at its highest for 30 years. Mexico has the dubious distinction of being the OECD member with the second largest gap in household incomes, exceeded only by Chile. The average income of the richest 10% of households in Mexico is now a staggering 26 times higher than the average income for the poorest 10% of households.

To quote the OECD report: “The income gap has risen even in traditionally egalitarian countries, such as Germany, Denmark and Sweden, from 5 to 1 in the 1980s to 6 to 1 today. The gap is 10 to 1 in Italy, Japan, Korea and the United Kingdom, and higher still, at 14 to 1 in Israel, Turkey and the United States.” The mean value for all OECD members is slightly less than 9.

In 2008, the richest homes in Mexico had an average income of 228,900 pesos (about 20,800 dollars at the then exchange rate), compared to just 8,700 pesos (790 dollars) for the poorest 10% of homes.

Looking at some of the factors likely to have caused the widening gap, the OECD report points out that, “Societal changes – more single people and single-parent households, more partners marrying within the same earnings classes – explained more than 70% of the increase in household earnings inequality. In other OECD countries, this factor was much less important. At the same time, women’s higher employment rates helped reducing household earnings inequality considerably.”

Full 400-page report:

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