Asian Development Bank

Within the attempts to understand Mexican economic inequality, returns to education have received a great deal of attention. The driving question has been: why are Mexican wages so unequal? Is it that the distribution of human capital is very unequal itself, that there is an increasing difference within superior levels of education, or both effects appear combined (Lopez-Acevedo 2004, Meza 1999) ? Moreover, and quite important from a policy perspective: how have the returns to education changed under the time framework? The 90’s in Mexico is a period of special interest for the understanding of returns to education (and inequality) because two mayor events occurred. First, signing of commercial treaties and a dramatic increase in trade (e.g. NAFTA). Second, the worst economic crisis in the modern history of the country happened in 1995. A recent paper that tries to understand inequality given these phenomena is Esquivel and Rodriguez-Lopez (2003). We believe that in order to understand the dynamics of inequality via returns to education, the analysis should not be restricted to the evolution of the educational distribution. There are factors within the workforce population that may be of considerable importance in explaining them. Among these factors different age structures, gender composition, unionization, regional development levels, are instrumental to recognize how returns to education have evolved. In Mexican experience the analysis of these variables has been limited. This should not come as a surprise give