Adjustment, poverty and labour market in Mexico City, 1982-1994

The relationship between structural adjustment policies and the increase in poverty has become the subject of a divided policy debate. Some scholars suggest that adjustment has had "social costs" in terms of employment and income losses (and increasing numbers of working poor), while other writers postulate that structural adjustment policies have benefited the poor. This thesis is concerned with the changes (between 1982 and 1994) in the living conditions and in the extent to which people are engaged in the labour market in Mexico, Mexico City and in one of its poor neighbourhoods. The information utilised derives from three main sources; employment surveys databases; income and expenditure databases; and my own survey carried out in 1995 in a poor neighbourhood in Mexico City. My main findings are: 1) Some structural reform policies had a negative impact on household income, particularly those related with wage controls. 2) Despite the fact that household income declined and thus income poverty increased, other welfare indicators improved. In the thesis I present the main arguments that explain this paradox. 3) Although it has been said that after the 1982 economic crisis households set in motion labour survival strategies, I have found that this proposition does not seem to hold true. This finding is supported by the fact that there is no evidence that households increase their extra-domestic work effort when their income declines. This means as well that there is no evidence to believe that the level of employment in Mexico is determined by labour supply. On the contrary, the evidence suggests that employment is highly determined by labour demand