IMF, 2018, “Poverty and Inequality in Latin America: Gains during the Commodity Boom but an Uncertain Outlook.” Western Hemisphere Regional Economic Outlook, April.
López-Calva, Luis Felipe, and Santiago Levy Algazi, 2016, “Labor Earnings, Misallocation, and the Return to Education in Mexico.” IDB Working Paper, IDP-WP-671, February.
Scott, John, Enrique de la Rosa, and Rodrigo Aranda, 2017, “Inequality and Fiscal Redistribution in Mexico, 1992–2015.” WIDER Working paper, 2017/194, November.
Prepared by Frederic Lambert and Hyunmin Park (WHD).
The Gini coefficient takes values between zero and one. The closer the Gini coefficient is to zero, the more equally distributed is income (or consumption, or wealth); the closer it is to one, the higher the inequality.
The Theil index is defined as the weighted average of the log of the ratio of individual income to average income:
where n denotes the total number of individuals, yi is the income of individual i, and
The decline in returns to education has been attributed to the increase in the supply of skilled labor and the misallocation of resources (Levy and Lopez-Calva, 2016).
Capital income tends to be under-reported in ENIGH and a comparison of ENIGH data with national accounts suggests this under-reporting may have increased over time (del Castillo Negrete Rovira, 2017).