Mexico 2000-2002 : Poverty Reduction With Stability and Expansion of Social Programs

During the 90's, poverty in Mexico followed the economic cycle. It diminished with GDP growth and with the stability observed during 1992-94, and it increased considerably between 1994 and 1996 as consequence of the macroeconomic crisis experienced in 1995. From 1996 to the year 2000 the recovery in economic growth matched a sustained reduction in poverty. This paper analyzes the evolution of poverty during the period 2000-2002. We show that in spite of being years of stagnation, considerable reductions in poverty were observed. We argue that what makes a difference for this period is: i) economic stability that allowed both, increases in real wages, and relative price reductions in some of the products included in the food basket taken as a reference to construct the poverty line, and ii) the expansion of the social safety net targeted to the poorest sectors of society by an unprecedented expansion of social programs. In terms of methodology, our contributions consist of adapting the official methodology for measuring poverty adopted by the Mexican government, to evaluate poverty changes in time, and to offer a decomposition of changes in poverty by income source