Income Inequality, Fertility, Human Capital Accumulation and Economic Growth in Mexico

Abstract

This research analyses the relationship between the levels of inequality and the growth rate of the Mexican states using as theoretical reference the Inequality-Human capital theory proposed by De la Croix and Doepke (2003) which links negatively inequality to growth via its effects on the differentials in fertility rates and on human capital accumulation which affect the growth rate of a country on the long run. The findings are that the Mexican case fits exactly to the predictions. The poorest states are the ones with the higher fertility levels, the lower education levels and the ones in which the newborns mothers have the lower education level. It was also found that the richer states are the ones who absorb the effects of external economic shocks. The results infer that redistributive policies are not as important as providing equal and universal access to education in order to boost long term growth.