Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Place-specific determinants of income gaps: New sub-national evidence from México

217 views

Published on

The literature on income gaps between Chiapas and the rest of Mexico revolves around individual factors, such as education and ethnicity. Yet, twenty years after the Zapatista rebellion, the schooling gap between Chiapas and the other Mexican entities has shrunk while the income gap has widened, and we find no evidence indicating that Chiapas indigenes are worse-off than their likes elsewhere in Mexico. We explore a different hypothesis. Based on census data, we calculate the economic complexity index, a measure of the knowledge agglomeration embedded in the economic activities at a municipal level in Mexico. Economic complexity explains a larger fraction of the income gap than any individual factor. Our results suggest that chiapanecos are not the problem, the problem is Chiapas. These results hold when we extend our analysis to Mexico’s thirty-one federal entities, suggesting that place-specific determinants that have been overlooked in both the literature and policy, have a key role in the determination of income gaps.

Published in: Economy & Finance
  • Be the first to comment

  • Be the first to like this

Place-specific determinants of income gaps: New sub-national evidence from México

  1. 1. Place-specific determinants of income gaps: Sub-national evidence from Chiapas, Mexico 3/27/19 1 miguel_santos@hks.harvard.edu @miguelsantos12
  2. 2. Chiapas is not only Mexico´s poorest state… Source: INEGI (PIB) y CONAPO (Población) 23/27/19 0 50,000 100,000 150,000 200,000 250,000 300,000 Distrito Federal Nuevo LeónCoahuila Cam peche Baja California Sur Querétaro QuintanaRooSonora Aguascalientes Baja CaliforniaColim aJalisco Tam aulipasNacional ChihuahuaYucatán San LuisPotosíSinaloa GuanajuatoDurangoM orelosVeracruz ZacatecasTabascoHidalgoM éxicoNayaritPuebla M ichoacánTlaxcalaGuerreroOaxacaChiapas Non-oil Income per capita (constant pesos 2010) X 6.1
  3. 3. 3 … it is also the lowest growth rate amongst Mexico´s 32 states Source: INEGI. 3/27/19 3.3% 3.2% 2.8% 2.5% 2.5% 2.5% 2.4% 2.3% 1.8% 1.8% 1.8% 1.7% 1.6% 1.6% 1.6% 1.6% 1.5% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.3% 1.3% 1.2% 0.9% 0.8% 0.8% 0.5% 0.3% 0.2% 0.2% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Zacatecas Querétaro DistritoFederalSonora Aguascalientes NuevoLeón SanLuisPotosí GuanajuatoVeracruzYucatánNacional ChihuahuaPuebla BajaCaliforniaSurTabascoJaliscoCoahuilaNayarit M ichoacánOaxacaSinaloaM éxicoGuerreroM orelos QuintanaRooHidalgo CampecheColimaDurango Tamaulipas BajaCaliforniaTlaxcalaChiapas Compounded Annual Growth Rate (2003-2013)
  4. 4. 4 The income gap between Chiapas and rest of Mexico keeps widening Fuente: INEGI. 3/27/19 46.1% 43.6% 42.7% 42.4% 40.4% 41.1% 42.1% 42.8% 42.2% 41.2% 39.7% 53.4% 54.6% 54.0% 53.3% 53.4% 52.2% 54.6% 55.0% 53.0% 51.7% 51.3% 52.0% 51.8% 51.1% 49.6% 49.0% 49.0% 51.2% 49.6% 49.9% 49.3% 50.1% 35% 40% 45% 50% 55% 60% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Non-Oil GDP per capita (as percentage of national income per capita) Chiapas Guerrero Oaxaca CAGR 2003-2013: 1.4% CAGR 2003-2013: 0.2%
  5. 5. 5 Large differences in Mexico reproduce as in a fractal within Chiapas 3/27/19 0 5,000 10,000 15,000 20,000 Tuxtla Gutiérrez Com itán deDom ínguez Reform a Chiapade Corzo Tuxtla Chico Pichucalco M etapa Jiquipilas Cacahoatán M azatán Villaflores UniónJuárez M apastepec Chiapilla OsumacintaAcala Chicoasén FronteraCom alapa Escuintla Tapilula SanFernando OcozocoautladeEspinosa Tuzantán Venustiano CarranzaBochil M otozintla Tecpatán Acacoyagua Coapilla AngelAlbino Corzo LaConcordia Teopisca M azapadeM adero Tapalapa LasM argaritas Chapultenango LaIndependencia LaGrandezaJitotol Simojovel Pantepec Bella Vista Huitiupán Totolapa ElPorvenir M arquésdeCom illas Bejucalde Ocam po Tumbalá Sabanilla Am atenango delValle HuixtánChilón Larráinzar Chenalhó Zinacantán Pantelhó SantiagoelPinar Chalchihuitán Aldam a GDP per capita (constant pesos 2010) Source: PNUD, con base en Censo 2010 X 8.5
  6. 6. 7 Usual suspects: Is it because of education? Strong investment in education has reduced the schooling gap… 3/27/19 Fuente: Censo Poblacional 2010 (INEGI).
  7. 7. 83/27/19 Usual suspects: Is it because of education? To earn the same as a Mexican worker in Chiapas you must study a lot more Monthly income from work and years of schooling To earn the same as a Mexican worker with 6 years of schooling, in Chiapas you must have 10 years of schooling
  8. 8. 93/27/19 Usual suspects: Is it because the quality of education? Quality in education does not account for these large differences Monthly income from work and years of schooling
  9. 9. Lessons from migrants: Chiapas vs. Rest of Mexico (100%) 10 0 20 40 60 80 100 120 140 Resto de Mexico Chiapas Total 100.0 67.2 15.1 51.6 115.1 118.8 * Monthly income, controlling for years of schooling, quality (ENLACE), experience, gender and indigenous. Monthly Income Migrant Premium Total monthly income Rest of Mexico Chiapas 3/27/19 Monthly Income Migrant Premium Total monthly income
  10. 10. 0.17 -0.03 0.08 0.04 0.26 0.64 0.00 SCHOOLING EXPERIENCE FEMALE INDIGENOUS RURAL EXPLAINED VARIATION TOTAL INCOME GAP 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Oaxaca Blinder Decomposition 2010 Individual Characteristics Usual suspects only account for less than one-third of the difference in income between Chiapas and the rest of Mexico 113/27/19 Chiapas vs. Rest of Mexico Factors associated to the income gap
  11. 11. There are also usual suspects that are place-specific: Finance 123/27/19 Interest rates by type of business: Chiapas vs. Rest of Mexico Micro-business Small business Small business Middle/sized business Large business
  12. 12. Business are unlikely to surge from within… as there are not strong social bounds or trust out of the family circle 133/27/19
  13. 13. Name three people out of the family you trust to start a business: Women network from Tucuman 143/27/19
  14. 14. Large distrust prevails beyond the family, associations or cooperatives to pool assets and increase returns are unlikely Social network of women in Cruztón 153/27/19
  15. 15. There are also usual suspects that are place-specific: Infrastructure Roads… 163/27/19 Dávila, Kessel and Levy (2002): highlighted the issue of radiality of the Mexican road system, as an issue to the economies of Southern states, and suggested four different investments…
  16. 16. There are also usual suspects that are place-specific: Infrastructure Roads… 173/27/19 By 2013, all these projects have been completed… The savings in distance and time surpassed the expectations… And Chiapas continues to lag behind… 3/27/19 Chiapas, Mayo 2015 Ahorro en dis- tancia (kms) 251.3 940.1 165.9 707.8 Ahorro en tiem- po (hrs) 5.9 43.4 2.8 13.4
  17. 17. There are also usual suspects that are place-specific: Infrastructure Chiapas also has three commercial airports… 18 Tuxtla Gutierrez Tapachula Palenque
  18. 18. There are also usual suspects that are place-specific: Infrastructure And a brand new (mostly idle) port 19
  19. 19. The Scrabble theory of development
  20. 20. What did Mexico export in 2014? 213/27/19
  21. 21. The product space of Mexico 223/27/19
  22. 22. What did Chiapas export in 2014? 233/27/19
  23. 23. The product space of Chiapas 243/27/19
  24. 24. 253/27/19 Diversity and ubiquity for Mexican states Aguascalientes Baja California Baja California Sur Campeche Coahuila Colima Chiapas Chihuahua Distrito Federal Durango Guanajuato Guerrero Hidalgo Jalisco México Michoacán Morelos Nayarit Nuevo León Oaxaca PueblaQuerétaro Quintana Roo San Luis Potosí Sinaloa Sonora Tabasco Tamaulipas Tlaxcala Veracruz Yucatán Zacatecas 2022242628 Averageubiquityofindustrialcomposition(kc,1 ) 400 500 600 700 800 Diversity of industrial composition (kc,0 )
  25. 25. 263/27/19 Economic Complexity Index for Exports -0.50 0.00 0.50 1.00 1.50 Tamaulipas Chihuahua Querétaro NuevoLeón México SanLuisPotosí BajaCalifornia Tlaxcala Morelos Coahuila DistritoFederal Sonora Hidalgo Jalisco Aguascalientes Guanajuato Tabasco Veracruz QuintanaRoo Zacatecas Campeche Puebla Durango Yucatán Guerrero Michoacán BajaCaliforniaSur Oaxaca Colima Chiapas Nayarit Sinaloa
  26. 26. 273/27/19 Economic Complexity Index for Industries (IMSS) -2.00 -1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 Querétaro México Coahuila NuevoLeón Chihuahua BajaCalifornia Guanajuato SanLuisPotosí Tlaxcala Puebla Hidalgo DistritoFederal Jalisco Tamaulipas Durango Aguascalientes Sonora Zacatecas Morelos Michoacán Yucatán Sinaloa Veracruz Colima Tabasco BajaCaliforniaSur Guerrero Oaxaca Nayarit Chiapas QuintanaRoo Campeche
  27. 27. There exist large difference in economic complexity within Chiapas… 3/27/19 28
  28. 28. Economic Complexity increases the explained variation of total differences and is higher than any other of the factors 293/27/19 0.16 0.00 -0.03 0.05 0.02 0.15 0.35 0.64 SCHOOLING EXPERIENCE FEMALE INDIGENOUS RURAL ECI EXPLAINED VARIATION TOTAL INCOME GAP 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Oaxaca Blinder Decomposition 2010 Indiv. Characteristics + ECI Chiapas vs. Rest of Mexico Factors associated to the income gap
  29. 29. Disentangling education vs. complexity 303/27/19 0.00 -0.03 0.05 0.02 0.15 0.35 0.64 0.16 SCHOOLING EXPERIENCE FEMALE INDIGENOUS RURAL ECI EXPLAINED VARIATION TOTAL GAP 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.17 0.03 0.28 0.14 0.16
  30. 30. The product space of Chiapas 313/27/19
  31. 31. The product space of Chiapas 323/27/19
  32. 32. 333/27/19 Yazaki is the exception that confirms the rule…
  33. 33. 1,550 direct jobs 950 direct jobs 200 direct jobs 450 direct jobs 550 direct jobs 3/27/19 Octubre, 2015 34
  34. 34. 35 Usos y costumbres: Heavy fines imposed on migrants 3/27/19
  35. 35. 36 Transportation costs as a regressive tax 3/27/19 300 233 200 120 120 110 75 70 60 50 0 50 100 150 200 250 300 350 Director escuela Maestro de escuela (bilingüe) Trabajadores Prospera Electricista Albañil Ayudante fábrica Pox Otros trabajos (en San Cristóbal) Ayudante albañil Ayudas varias campos maíz/frijol Lavandería Cruzton: Daily salaries and cost of transportation (40 pesos round trip in shared cab) Salario diario Salario día (neto de transporte) 13% 17% 20% 33% 33% 36% 53% 57% 67% 80% Daily equivalent of monthly salaries (30 days) Wage per day Daily wage (urban) Daily wage (net of transport costs)
  36. 36. 37 Identifying potential diversification opportunities at the municipality level Tuxtla Gutiérrez Tapachula San Cristóbal de las Casas Comitán de Dominguez 3/27/19
  37. 37. 38 There are not much low hanging fruits in Chiapas… 3/27/19
  38. 38. 39 As one may find in places like Morelos… 3/27/19
  39. 39. 40 Fuente: Censo de Población 2010, cálculos propios. When you have few letters it is difficult to acquire new letters… 3/27/19
  40. 40. Atlas de Complejidad Económica Funcionalidades y beneficios por tipos de usuarios 41 Tuxtla Gutierrez San Cristobal de las Casas ComitánTapachula
  41. 41. So what do we propose? Bring the mountain closer to Muhammad 42 Pro-Chiapas: Investment Promotion Bring new business models • Tapachula • Comitan • Palenque • Chilon • Tuxtla • San Cristobal • Reforma • Ocosingo
  42. 42. México, Octubre 2014 43 Where do new business models come from? Elsewhere in Mexico!
  43. 43. So what do we propose? Bring the mountain closer to Muhammad 44 Pro-Chiapas: Investment Promotion Bring new business models • Tapachula • Comitan • Palenque • Chilon • Tuxtla • San Cristobal • Reforma • Ocosingo Special Economic Zones Agro-industrial Zones
  44. 44. 453/27/19 San Cristobal de las Casas has a great potential as a special zone
  45. 45. Population density to the south of San Cristobal is very high 46 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! !! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! !! ! ! ! !!! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! !! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!! ! ! ! !! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! $+ Buffer Areas $+ San Cristobal de las Casas ! Localities Buffer 10km Buffer 20km Buffer 35km Population High : 1527.79 Low : 80.2128 3/27/19
  46. 46. Atlas de Complejidad Económica Funcionalidades y beneficios por tipos de usuarios 47 Pro-Chiapas: Investment Promotion Special Economic Zones Agro-industrial Zones Public transportation: Solve labor mobility bottleneck Housing policy: Habitats vs. Housing Bring new business models • Tapachula • Comitan • Palenque • Chilon • Tuxtla • San Cristobal • Reforma • Ocosingo 3/27/19
  47. 47. Thank you!

×