Vulnerability of Mexican Farm Households in a Changing Economy

In the context of the structural transformation of the Mexican economy, we conduct a comparative analysis of incomes of farm households relative to non-farm households over the last two decades. We use household-based budget surveys from 1984 to 2004 that are collected and harmonized by the Luxembourg Income Study. We first examine the evolution of average farm household income relative to average non-farm household income across Mexican regions over that period. Second, we show the evolution of low-income and inequality indicators of farm households relative to non-farm households across regions and years. We then investigate whether explanations for low farm income given in the literature also apply to Mexico by econometrically testing both household socio-demographic variables and macroeconomic variables such as commodity and labour market conditions, income- earning capacity and agricultural programmes.