Inherited Inequalities in the Land of Pedro Páramo

      “I came to Comala because I had been told that my father, a man named Pedro Páramo, lived there.” Thus, Juan Rulfo began Pedro Páramo, one of the masterpieces in Spanish-language literature. In this Mexican novel, the past continues to influence the present up until the point where the two of them overlap. The line that differentiates them subtly vanishes. While the novel is fiction, Juan Rulfo portrayed a hard reality: the heavy burden of the conditions of origin in the everyday lives of Mexicans, as circumstances that shape different life trajectories, opening or closing opportunities depending on factors completely outside the control of a person such as their place of origin, their skin tone or the educational attainment of their parents.

      Economics has taken longer than literature to catch up in acknowledging the importance of these factors in shaping observed economic inequalities. In this brief essay, I aim to summarize part of the economic literature that has focused on estimating the degree to which inequalities in Mexico are inherited, as well as ways in which economic inequalities in the country are perpetuated. 

Inequality of opportunity as inherited inequalities 

      Two elements determine economic outcomes for most Mexicans (and Latin Americans in general): the relative effort that the person exerts and factors outside of their control that provide certain advantages. These factors are known as circumstances. If everyone were to start with the same circumstances or if these circumstances were not relevant in determining economic outcomes, then any observed economic inequality would be due to differences in the degree of effort exerted.. In contrast, if everyone exerts the same degree of effort but circumstances remain linked to economic outcomes, any observed inequality would be due to the influence of factors outside the person’s control. Whereas in the first scenario inequality can be considered to be fair, as it arises exclusively from factors under the control of the person, in the second case inequality is an unfair result, as the individuals who benefit from and are negatively impacted by it did not influence its determination. Moreover, this means that the circumstances shape the distribution of possible economic outcomes into which every individual is born, shaping their opportunities for personal development. It is this type of inequality, the one produced by the influence of circumstances, the one the literature defines as inequality of opportunity, or more precisely, inequality of opportunity sets, as seen in the work of Dirk van der Gaer and John E. Roemer on the subject.

      However, life is not as simple as an economic model. As Juan Preciado in Pedro Páramo, who is bound by both his promises and his past, the income inequality we observe is determined by a combination of differences in effort and differences in circumstances. If an intergenerational perspective is considered, then the differences in circumstances become the differences in outcomes of previous generations, which are either directly transferred from one to the next or through the evolution of institutions in society. In the first case, I am considering the resources, not only in monetary form but also in terms of cultural and social capital, that are directly transferred through the household of origin of the person. In the second case, I refer to the evolution of the social valuation of specific characteristics, such as gender, ethnicity or skin tone, whose relevance in the organization of society is shaped by the evolution of its formal and informal institutions.  Under this lens, the share of total inequality that can be considered as inequality of opportunity is also the share that is inherited inequality. 

Picture Courtesy of Georgina Rodrigues.

The magnitude of inequality of opportunity in Mexico

      With this framework in mind, the first question that arises is: What is the magnitude of inequality in Mexico that can be attributed to inequality of opportunity? The first step to answering this question is to define the relevant circumstances in the case of Mexican society. Taking as a reference the research on intergenerational economic mobility and the research on horizontal inequalities, the set of circumstances considered for the Mexican case is composed of the economic resources of the household of origin, the educational attainment of the parents, the region of the country where the person was born, the type of community in which the person was born, the skin tone, ethnicity and gender of the person. This set therefore is a combination of factors that affect directly the effective availability of goods and services to satisfy needs (economic and educational resources, region and type of community of origin) and personal characteristics that are relevant due to their social valuation, not due to their effect on the capacities of the person (skin tone, ethnicity and gender). 

      Together, the differences in these circumstances across the Mexican population account for half of the total inequality observed in economic resources and income. Considering that this set of circumstances does not encompass all the possible circumstances that affect income or economic resources, it means that inequality of opportunity accounts for at least half of the inequality in income and economic resources in Mexican society. In other words, in Mexico, at least half of inequality is inherited either directly or through the social institutions. As in the Comala of Pedro Páramo, in the Mexican income distribution, the past continues to shape the trajectory of the present. 

      Among these circumstances, the resources of origin (either economic or educational) are the main drivers of inequality of opportunity in the country. This is indicative of the lack of public systems that adequately provide access to education, housing, healthcare and social security services to the population, forcing households to undertake these expenditures on their own. In a scenario in which assets are already heavily concentrated and the financial sector allocates credits based on that distribution, this translates into a scenario where the households’ own resources have to finance intergenerational investments in education, care work and healthcare, making the initial unequal distribution of resources replicate into the next generation. Data from the ESRU-EMOVI Social Mobility in Mexico Survey 2017 allows to provide a sense of the magnitude to which the economic resources of origin play a role in affecting the economic trajectory of a person. Consider that one out of every two people born in the bottom 20% of economic resources distribution is likely to remain in the same part of the distribution in adulthood. At the same time, one out of every two people born at the other extreme (the top 20% of the distribution) is likely to remain in the same position in adulthood. 

      Households, however, do not exist in the same geographical space. The aggregate dynamics of the different regions of the country, as well as the dynamics of the type of community in which a person inhabits, shape the available resources. Similarly, they determine the kind of labor markets in which people insert themselves when entering the labor market. Consequently, the region of origin and the characteristics of the community of origin constitute the second set of circumstances in terms of importance in determining the magnitude of inequality of opportunity in the country. The uneven regional development that Mexico has experienced throughout its history implies that the economic space in which households exist depends heavily on their zip code. For instance, as Roberto Vélez and I document in Por una cancha pareja, whereas a person born among the poorest 20% of the national economic resources’ distribution in the north of the country has a 46% chance of climbing out of poverty, a person born in the same segment of the national distribution but in the south has only a 14% chance of doing so. The opportunities that a person has to develop their own life projects are thus heavily dependent on the part of the country where they were born.

The shape of the roads in Comala depends on who you are  

      Although resources and the region of origin are mostly what produce inequality of opportunity in the country, each interacts with how specific personal characteristics are valued by society to shape what a person experiences as their own economic trajectory. In the Mexican case, the person’s sex at birth, skin tone and ethnicity are a third set of circumstances. It is worth highlighting that, in contrast to the region of origin or the resources at birth, these characteristics, by themselves, should not be linked in any way to access to economic opportunities, as they are not materially linked by their properties to the distribution of resources in society. They only become circumstances the moment society employs those characteristics as a criterion to value differently the effort performed by a person, or to curtail access to specific life trajectories. It is through this process that personal characteristics are transformed into distributional criteria, and thus the natural heterogeneity transforms into a hierarchical order that produces inequality of opportunity. 

      Consider the case of two persons, born in the bottom 20% of the distribution of economic resources, who come from households with parents with no formal education completed and who manage to complete high school at least. If the person in question is not Indigenous, the probability that they remain in poverty in adulthood is 51%. If the person in question is Indigenous, the probability is 72%. In both cases, the material conditions of origin (educational and economic resources) predispose the high persistence in poverty conditions. But the difference in how ethnicity is valued in Mexican society produces the stark difference in the valuation of effort. In one case, the person who is not Indigenous, completing three educational levels above one’s parents, almost has a 50-50 chance of escaping poverty. In the case of the Indigenous person, the effort is nowhere near as equally rewarded. In both cases, if we consider the population with the darkest skin tone of each group, their probability of remaining in poverty is even higher, even when they experience at least one more year of education than their parents. For the Indigenous population of the darkest skin tone, the probability is 88%, while for the non-Indigenous population, it is 65%.

      Another example is the comparison of the intergenerational mobility between men and women of different skin tones. Whereas light-skinned men and women face the same odds of climbing out of the bottom 20% of economic resource distribution (55%), in the case of dark-skinned men, the probability of climbing out of that position is 47%, whereas for dark-skinned women, it is 42%. At the other extreme, the probability of remaining at the top 20% of the distribution of economic resources is the same between light-skinned men and women (68%), whereas for dark-skinned men it is 54%, and for dark-skinned women it is 37%. These differences highlight how dark-skinned women face a more dire economic landscape than their male peers or their light-skinned peers, providing a glimpse into the hierarchy in terms of economic opportunity that is enforced through the Mexican stratification system. 

Exiting Comala: What Can We Do to Diminish Inequality of Opportunity in Mexico? 

      By the middle of the novel, Juan Preciado came to the realization that he would not be able to exit Comala. In the face of the daunting evidence regarding the magnitude of inequality of opportunity in Mexico, one could have the same feeling regarding the possibility of the country escaping from its persistent trajectory of high inequalities and low intergenerational social mobility throughout time. However, in contrast with Juan Preciado, Mexican society can still change its course regarding how it organizes itself in terms of the distribution of opportunities among its members. 

      It is unrealistic to expect that relatively small interventions such as a new cash transfer program can substantially modify a distributive arrangement that produces the structural inequalities I’ve described here. Instead of focusing on solutions at the margin, the push should be to expand and improve the existing public systems so that they are able to effectively guarantee access to healthcare, education and social security to all members in Mexican society. Moreover, given the challenges of our time with respect to climate change and automation, it is also urgent to invest in the creation of new public systems aimed at dislodging the structural elements that produce inequality of opportunity. 

      A clear example of this type of system is the care work system. Currently, Mexican society relies on woman to perform care work on a scale that prevents their economic insertion, restricting their options with regard to what they want to do and be. A public care system would mean recognition of the importance of care work for the functioning of societies, but also would also be an effective way of lifting the weight that society has imposed on women with regard to the performance of care work. In the case of regional disparities, a place-based approach to the identification of infrastructure needs can help to detonate growth in the south of the country, helping to close the gap between it and the rest of the country. Policies aimed at reducing discrimination in the labor market and their correct and strict enforcement can help to positively transform the informal rules that reward differently the effort of a person based on their looks or their ethnic identity. As can be seen, the policies that are necessary to diminish inequality of opportunity in the country are, by necessity, geared towards transforming the systems and institutions that order the Mexican economy. Nothing less will be enough for Mexican society to stop being a society in which the origin still determines not only the present, but also the future of its members.

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