Economic crisis, adjustment and living standards in Mexico, 1982–85

Abstract

This paper presents an estimate of the impact of economic crisis and adjustment on the living standards of the Mexican population between 1982 and 1985. The analysis is based on information on wage and nonwage incomes, unemployment, functional income distribution, changes in public expenditures, and social indicators. The specific questions addressed are: What happened to agricultural and nonagricultural wage and nonwage incomes? How did unemployment and the composition of employment change? What was the impact of fiscal cuts on social expenditures and food subsidies? Were social services affected by declining resources? Did social indicators worsen? In addition, households' strategies in response to declining incomes are briefly discussed. Finally, conjectures are made regarding which population groups were hurt most by the crisis. The results indicate that the crisis and adjustment process left Mexico with a relatively impoverished middle class and with rising poverty.