ROSA ELVIRA CEDILLO VILLAR

Intergenerational Transfer Accounts in Education from the Inequality Approach in Mexico 1994, 2006 and 2014 

 

Rosa Elvira Cedillo Villar

PhD Student, El Colegio de México

Abstract

 

The research analyzes how socioeconomic inequality affects the private and public capacity for investments in education, and how socioeconomic factors affect the educational inequality. The primary data sources are the Mexican Household Income and Expenditure Survey (ENIGH) and the National Accounts System of Mexico (SCNM). Our hypothesis is that higher economic life cycle deficit reduces the possibility to transfer resources to dependents (children, young people and the elderly). Consequently, it is expected that educational investments will be differentiated and inequitable in Mexico, what could contribute to the generational reproduction of educational inequalities and affect productivity and economic growth in the long term. Thus, this research intends to identify the potentials and disadvantages of educational investment in an unequal socioeconomic context where a population with greatest socioeconomic disadvantages could have the most limited capacity of human capital investment. The principal contribution of this project is incorporating the inequality analysis perspective in the National Transfer Account Approach, because some Mexican specificities about transfer behavior on economic life cycle deficit could be explained by the inclusion of inequality approach. 

 

Keyword: National Transfer Accounts, Education Transfers, Education Dividend, Inequality. 

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Extended Abstract 

 

This study uses the National Transfer Accounts Manual (United Nations, 2013), a methodology that allows estimating the income, consumption and economic life cycle deficit profiles. This research focuses on the analysis of intergenerational transfers and inequality in education for the years 1994, 2006 and 2014. The periods of analysis are selected to reflect the education decentralization process in Mexico. In the 1980s Mexico witnessed decreasing public education expenditures, which prompted the Mexican government to increase the responsibilities of directors, teachers and parents in the school management in 1982, and finished with the reform of the General Education Law in 2013. In general, the research analyzes how socioeconomic inequality affects the private and public capacity of education investment and how socioeconomic factors affect the reproduction of education inequality. 

The primary data sources are the Mexican Survey of Household Income and Expenditure Survey (ENIGH) and the National Accounts System of Mexico (SCNM). Both are publicly available from the Mexican Institute of Geography and Statistics (INEGI). 

  

This project tries to answer three general questions: 

 

1. Which groups and individuals could invest in human capital and be able to take advantage of the educational dividend? 

2. Where should Mexican government invest more to improve human capital and reduce gaps in socioeconomic inequality?

3. How does the economic life cycle deficit and inequality reduce the possibility of to attain higher education of children and youth? 

 

This research assumes as a hypothesis that higher economic life cycle deficit lesser transfer resources possibility to dependents (children, young people and the elderly). Consequently, it is expected that education investment will be differentiated and inequitable in Mexico and this could contribute to the generational reproduction of educational inequalities and would affect total productivity factors and economic growth in the long term. Also, some researcher as Renteria et al. (2016) and Crespo, Lutz & Sanderson (2014) explained that using educational dividend only it is possible if occupational insertion is efficient. Thus, the education attainment has to be followed by the optimal equilibrium between labor market supply and demand.  

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The principal contribution of this project is incorporating the inequality analysis perspective in the National Transfer Account Approach. It is relevant to note that some Mexican specificities about transfer behavior on economic life cycle deficit could be explained by the inclusion of inequality dimension. Moreover, Latin America is an unequal society, for example, the Gini Index for Latin America was 0.51 in 2014 (Trueba and Remuzgo, 2017: 145). Consequently, studying how inequality affects the possibility of education investment throughout the economic life cycle is essential to understand the specificity of intergenerational transfers flows in Mexico. 

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Indeed, the Mexican demographic window opportunity started around 2010 and will remain open until 2040 (García, 2014). For three decades, Mexico will have the most significant volume of the working-age population. It condition could be used as a boost economic growth or generated socioeconomic issues like violence or unemployment.  If society and the Mexican government hesitate to encourage the productive insertion of young people and adults in the country will miss the opportunity to increase its economic growth through using total production factor, increasing female labor participation and improving qualifications of human capital. In this regard, researchers such as Peng (2013), Krishnamurty and Kumar (2015) advice that in case of inadequate use of demographic window opportunity, it could become an unemployment burden in the short term, and precarious health and employment conditions for elderly population and youths in the long term.  In brief, this research would provide useful elements to identify potentials and disadvantages of education investment in an unequal socioeconomic context where a population with greatest socioeconomic disadvantages could have the most limited capacity of human capital investment. For that reason, it is relevant to include the inequality approach because it differentiates educational opportunities. 

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The thesis project is divided into five chapters. Chapter 1 presents the theoretical framework which explains the match between concepts and demo-economic approach. It recovers some elements of economic theory, demographic analysis, and inequality socioeconomic perspective to explain the age, cohort and period effects in the generational economy. Chapter 2 contextualizes the process of decentralization and educational reform between 1980 and 2014 because it is relevant to show how changes in the role of the Mexican State in education have affected the levels of public and private education expenditure. Chapter 3 analyzes consumption, income, and life cycle deficit profiles of households by subpopulation (each of them defined by different levels of the Human Development Index). The purpose is to show gradients of transfer possibilities throughout the economic life cycle and thereby identify how inequality affects public and private transfers. Chapter 4 focuses on the analysis of intergenerational transfers in education all over the economic life cycle, differentiating according to a range of inequality levels (the indicator of inequality is the Human Development Index). This section tries to identify which population has more or fewer possibilities of education investment. Chapter 5 estimates the Mexican Education Dividend for 1994, 2006 and 2014. The last part intends to make a prospective study about how population education attainment affects economic growth at a macroeconomic level from 1994 to 2050.  

 

References 

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Alba, F., Giorguli, S. y Pascua, M. (2014). “Cambios deográficos y desarrollo: acomodos azarosos”, Los mexicanos. Un balance del cambio demográfico, México, Fondo de Cultura Económica, pp. 561-593. 

Banco Mundial (1991). Basic Education in Mexico: Trends, Issues and Policy Recommendations, Washington, Banco Mundial. 

Crespo, Lutz y Sanderson (2014). “Is the Demographic Dividend an Education Dividend?”, Demography, núm. 51, pp. 299-315. 

García, Víctor (2014). “El futuro demográfico de México y las proyecciones de población: uso de los pronósticos probabilísticos en la planeación nacional”, Gobierno, territorio y población: las políticas públicas en la mira, México, El Colegio de México, pp. 71-69-119. 

Inegi (2017). Encuesta Nacional de Ingresos y Gastos en los Hogares (ENIGH) Tradicional, Microdatos. Disponible en línea. Recuperado el 7 de marzo de 2017, URL: http://www.beta.inegi.org.mx/datos/?init=2 

Krishnamurty, J. y Kumar, A. (2015). “The demographic dividend: challenges to employment and employability”, Indian Journal of Labour Economics, noviembre, Springer, Estados Unidos. 

Naciones Unidas (2013). National Transfer Accounts Manual: Measuring and Analysing the Generational Economy, Nueva York, Autor. 

Nava-Bolaños, I. y Ham-Chande, R. (2016). “Demographic Dividends and Households Saving in Mexico”, Demographic Dividends: Emerging Challenges and Policy Implications, Springer, Estados Unidos, pp. 45-60 

Peng, Xizhe (2013). “Understanding China’s Demographic Dividends and Labor Issue”, Journal of Policy Analysis and Management, pp. 408-410. 

Renteria, et al (2016). “The Effect of Education on the Demographic Dividend”, Population and Development Review, núm. 42, vol. 4, diciembre, pp. 651-671. 

Schultz, T. Paul (1987). “School Expenditures and Enrollments, 1960-1980: The Effects of Income, Prices and Population Growth”, Population Growth and Economic Development: Issues and Evidence, Madison, University of Wisconsin Press, pp. 413-476. 

Schultz, T. (1961). “Investment in Human Capital”, The American Economic Review, vol. 51, núm. 1, pp. 1-17. 

Schultz, T. (1960). “Capital Formation by Education. Journal of Political Economy”, Journal of Political Economy, vol. 68, núm. 6, diciembre, pp. 571-583. 

Trueba, C., y Remuzgo, L. (2017). “Evolution of Inequality in Latin America (1980-2014): A Multidimensional Approach Beyond Income”, Revista de Economía Mundial (45), World Economy Society, pp. 143-160. 

Willis, Robert (1988). “Life Cycles, Institutions, and Population Growth: A Theory of the Equilibrium Interest Rate in an Overlapping Generations Model”, Economics of Changing Age Distribution in Developed Countries, Oxford University Press, Estados Unidos, pp. 106-138.