STABILIZATION AND ADJUSTMENT WITH INEQUALITY AND POVERTY - CASE OF MEXICO

The paper analyzes the relationship between adjustment, poverty and inequality for Mexico during the 1980s. We rely on decompositions of inequality and poverty indexes to determine if the costs and benefits during the process were distributed in an egalitarian way, if the pattern of development corresponds to the Kuznets process, and to analyze changes in poverty. We suggest a transformation of a poverty decomposition method to determine the likelihood of compensating in the future those sectors of the population who paid the higher social costs derived from the contractionary policies. The results suggest that adjustment and stabilization were accompanied by increases in inequality and poverty. The main conclusion is that through the process, an important change in the structure of the economy took place, and as a result, despite high growth rates, considerable reductions in inequality are necessary for the eradication of poverty in a feasible time horizon.