Combating Poverty and Inequality

Maria del Carmen Huerta and Alessandro Goglio

Major policy efforts have helped Mexico reduce extreme poverty and improve access of the poorest to basic services, including health and education. Poverty and inequality in Mexico remain high in international comparisons, not only with other oEcD countries but also with emerging economies. They continue to be a challenge of utmost priority for Mexican policy makers. meeting that challenge requires a comprehensive strategy that includes labour market reforms to facilitate the expansion of the formal sector, measures to improve productivity in the agricultural sector, and policies to improve the quality of education and health services. In addition, social spending needs to be expanded, but also be made more efficient and better targeted to the most vulnerable groups.

In recent decades, Mexico has implemented a number of major policies to tackle poverty. the capacity of social programmes to reach out to the poor has been extended, leading to significant progress in reducing poverty and inequality, especially over the period between the mid-1990s and the mid-2000s. in 2012 the coverage of Oportunidades, Mexico’s main anti-poverty programme, reached 5.4 million families, more than 20% of all families (SEDESOL, 2012). The coverage of Seguro Popular, which provides basic medical health and preventive services and protection to people without health coverage (see chapter on addressing the health challenges), has also widened to provide universal coverage in 2012. These programmes have led to a reduction of extreme poverty, while at the same time supporting access of the poor to education and health services. Moreover, they have contributed to a reduction of longstanding wide regional disparities in access to basic services.

Despite these achievements, poverty and inequality in Mexico remain high in international comparisons, with both other OECD countries and several emerging economies. Estimates from the Consejo National de Evaluation de la PoUtica de Desarrollo Social (CONEVAL) indicate that in 2010, 51.3% of the total population (equivalent to 57.7 million individuals) were in patrimony poverty conditions, i.e. they did not have sufficient income to satisfy their food, health, education, housing, clothing and public transportation needs (Figure 2.1).[1] That count reached its highest point in 1996 after the 1994-95 tequila crisis, when 69% of the population was classified as poor. From this year until 2006, poverty decreased continuously, reaching 42.7% in 2006. However, with the global economic crisis,

Figure 2.1. Income poverty trends, 1992-2010

(Percentage of the total population)

Note: Figures here correspond to income poverty. The poverty line is set using the value of a food basket defined by INEGI and EcLAc in 1992. coNEVAL adjusted this poverty line to calculate three different levels of income poverty: food poverty, capability poverty and patrimony poverty. Food poverty is the lack of income needed to acquire a basic food basket, even if total household available income is only used to purchase the goods in such basket. Capability poverty is the lack of income needed to purchase a basic food basket and cover health and education expenses, even if total household income is only used for these purposes. Patrimony poverty is the lack of income needed to buy a basic food basket, as well as to cover expenses of health, education, housing, transportation and clothes, even if total household available income is exclusively used to purchase the goods in such basket.

Source: http://www.coneval.gob.mx/.

the downward trend was reversed. Poverty alleviation therefore continues to be a challenge of the highest priority for Mexican policy makers—especially in the current context of the weak global outlook that is exercising additional pressures on poverty reduction and the redistribution of income.

tackling these high poverty levels and improving the distribution of income requires a comprehensive strategy based on a wide range of interdependent policies to promote the expansion of the formal labour market, infrastructure investment, regional policies, agricultural and rural policies, policies to improve the quality of education and give better opportunities to all Mexicans, and policies to improve the quality of and access to health services. As many of these challenges are covered in other parts of this publication, the present chapter

focuses on the key social policy programmes to strengthen the fight against poverty and achieve a more equitable income distribution; it also discusses options that could help strengthen the capacity of these programmes to support incentives to work and enable expansion of the formal economy.

  • [1] These estimates are drawn from the official methodology that Mexico has usedto measure the evolution of poverty over the past two decades, based exclusively onhousehold income. This measure is used to show poverty trends since the early 1990s. Thecurrent official multidimension methodology, though accounting for income and a numberof other factors (access to food, education, health services, social security, housing qualityand social cohesion), cannot be used to provide estimates before 2008. Estimates from thetwo methodologies are not comparable: they differ not only in the number of componentsused but also in the food baskets used to set a poverty line. While estimates of incomepoverty are drawn using the value of a food basket defined by INEGI and ECLAC in 1992(see documents of the Technical Committee for the Measurement of Poverty 2002-04),estimates of the multidimensional approach use a basket developed by CONEVAL (http://web.coneval.gob.mx/Informes/Coordination/INFORMES_Y_PUBLICACIONES_PDF/Metodologia_Multidimensional_web.pdf). Using the multidimensional methodology, CONEVAL estimatesthat in 2010, 46.2% of Mexicans were poor (equivalent to 52 million persons).
 
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