Measuring Inequality and Poverty with Income and Consumption in Mexico

This paper examines poverty and inequality measures in Mexico from 1994 to 2014 using income and consumption data. Four resource measures are constructed, two income-based and two consumption-based. The findings reveal that consumption inequality, as measured by the Gini index, is consistently lower than income inequality. Growth Incidence Curves indicate pro-poor growth, and the analysis shows that income-poor and consumption-poor households don't entirely overlap, with a reduced overlap in 2014. This suggests underreporting in the lower income distribution, possibly due to increased informal employment. The argument is that consumption-based measures offer better approximations of household living standards and can complement income measures. JEL Classification: I32, D63