Height, Income and Intergenerational Education Mobility: Evidence for Mexico

Abstract

To promote development, Mexico decided to focus its social policy on generating incentives for human capital investments primarily using conditional cash transfer programs. To make these types of programmes effective, two important issues must be considered. First, the returns on human capital have to be positive and sufficiently high. Although there is important evidence that this is the case for education, less conclusive evidence exists for health in general and Mexico in particular. Because health capital may reflect aspects of productivity different from labour specialisation (that are related to education), it is important to have positive returns on health investments (that is, not only human capital in general). In addition, these investments will increase development only if social mobility is feasible, as human capital returns implied that increasing human capital would then result in increased labour income and thus mobility that would represent development. This study attempts to provide a better understanding of the importance of mobility in Mexican society. In this analysis, using data from a national representative survey, I found that the returns on health in Mexico are positive and at an order of magnitude similar to those reported for other countries. I also found that social mobility is present, although there is still an important intergenerational transmission of educational attainments.