Wage Shocks and Consumption Variability in Mexico during the 1990 s By Orazio

نویسندگان

  • Orazio P. Attanasio
  • Miguel Székely
  • Felipe Herrera
چکیده

The views and interpretations in this document are those of the authors and should not be attributed to the Inter-American Development Bank, or to any individual acting on its behalf. The Research Department (RES) produces the Latin American Economic Policies Newsletter, as well as working papers and books, on diverse economic issues. To obtain a complete list of RES publications and read or download them please visit our web site at: Abstract ♦ This paper presents evidence on the relationship between economic shocks to relative male wages and changes in household consumption in Mexico during the 1990s, which is a period characterized by high volatility. In addition to performing this type of analysis for Mexico for the first time, the paper makes two main contributions. The first is the use of alternative data sources to construct instrumental variables for wages. The second is to examine differences across four consumption categories: non-durable goods, durable goods, education and health. Our results for non-durable goods consumption reject the hypothesis that Mexican households are able to insure idiosyncratic risk. For the comparisons across consumption categories, the conclusion is that households in Mexico tend to react to temporary shocks by contracting the consumption of goods that represent longer-run investment in human capital, which makes them more vulnerable in the future. Chicago, whose Department of Economics' hospitality is gratefully acknowledged. The opinions expressed in this work are the authors' and do not necessarily represents those of the institutions with which they are affiliated.

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Wage Shocks and Consumption Variability in Mexico during the 1990s

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تاریخ انتشار 2001