Understanding Income Gaps within Mexico: Place-Specific vs. Individual Factors

Speaker: Tim Cheston

The literature on income gaps between Chiapas and the rest of Mexico revolves around individual factors. Yet, twenty years after the Zapatista rebellion, the schooling gap 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 of Mexico’s municipalities, a measure of knowledge agglomeration. 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.