Growth, inequality and poverty dynamics in Mexico

Latin American Economic Review

Table 3 Decomposition of changes in national poverty in Mexico into its growth, distribution, and inflation components (1992–2010)

	Poverty measures (% point change)
	Food poverty line			Extreme poverty line			Basic-needs poverty line
Effect	H	PG	SPG	H	PG	SPG	H	PG	SPG
Growth	0.6	0.2	0.1	0.5	0.2	0.1	4.1	0.01	0.2
Distribution	− 4.2	− 1.4	− 0.6	− 4.2	− 1.9	− 0.9	− 13.3	− 2.0	− 1.7
Inflation	1.6	0.6	0.3	1.5	0.8	0.4	6.9	0.7	0.7
Residual	− 0.2	− 0.2	− 0.1	− 0.1	− 0.2	− 0.1	0.5	− 0.1	− 0.1
Total change	− 2.20	− 0.84	− 0.40	− 2.3	− 1.07	− 0.57	− 1.76	− 1.42	− 1.00

	Relative roles of growth, redistribution, and inflation to the reduction of poverty in Mexico (1992–2010)
	Food poverty line			Extreme poverty line			Basic-needs poverty line
	H	PG	SPG	H	PG	SPG	H	PG	SP
Growth (%)	− 29	− 27	− 19	− 21	− 27	− 25	− 183	− 1	− 20
Distribution (%)	207	214	206	190	210	214	586	149	195
Inflation (%)	− 78	− 87	− 87	− 69	− 83	− 89	− 303	− 48	− 75
Total (%)	100	100	100	100	100	100	100	100	100

	Poverty-augmenting effect of growth and inflation in Mexico (1992–2010)
	Food poverty line			Extreme poverty line			Basic-needs poverty line
	H	PG	SPG	H	PG	SPG	H	PG	SPG
Growth (%)	27	23	18	23	24	22	38	2	21
Distribution (%)	73	77	82	77	76	78	62	98	79
Total (%)	100	100	100	100	100	100	100	100	100

The applied decomposition methodology was proposed by Günther and Grimm (2007) in the Journal of Development Economics. H, PG, and SPG stand for the headcount, poverty gap, and squared poverty gap indexes, which are part of the FGT poverty measures