Index

Introduction PP.01

Economic inequality PP.02

Economic inequality when contrasted with economic development. PP.02

The total economic inequality coefficient PP.09

Poverty in Nuevo Leon PP.10

Proposals to reduce both the economic inequality and poverty in the state of Nuevo
Leon PP.11

Conclusion PP.13

Sources cited PP.14

 Introduction

The following document will provide an analysis of both the economic

inequality levels in the state of Nuevo Leon, through the evaluation of various

variables or methods such as:

• The economic development variables, these aspects were beneficial for this
research since they can provide an appropriate landscape on how the state
is behaving when analyzing these variables, such as per capita income, the

access to healthcare services, the accessibility of educational services, the

nutritional levels, and the levels of corruption.

These variables are appropriate for this analysis since in developed countries
the levels of poverty are low and the economic inequality is less notorious
than developing ones, therefore this analysis will focus on comparing the
statistics provided by governmental data to se the behavior of these variables
over the years.

• On the other hand, the poverty indexes will be analyzed by using the statistics

provided by INEGI for the state of Nuevo Leon, to compare them to other

states’ data and be able to see how the subject of research is positioned in a

national point of view.

Once both the aspects are analyzed, there will be a part which focuses on
solution proposals to solve both the inequality and poverty issues base on both the
economic development variables and the poverty statistics provided in the state .

1
 Economic inequality

The concept to be analyzed in the following document is the economic

inequality which can be defined as “the difference in which all the assets, the well-
being or the total incomes are distributed or divided among the region´s population,
meaning that the scattering of the income, consumption values or other macro-
economic variables for the well-being of the citizens is distributed in an unequal value”
(OECD, 2015), therefore some of the needs of the people are not fully satisfied and
there are not enough conditions for some people to live properly.

According to statistics provided by (Filguera, Peri, 2004) “when the Gross

Domestic Product (GDP), increases in rates higher than 3%, the inequality will be
higher, while the slower GDP growths that are nearest to economic stagnation, will
have lower inequality rates, meaning that there will be an equalization towards
poverty for the population”. Therefore, countries that have slower rates for economic
development tend to have less inequality rates. However, the previous statement
does not mean that poverty and inequality are directly correlated, because there are
various approaches to interpret economic inequality, since inequality analyzes the
variations in the population´s standards, even if the people are in poverty conditions
or not, in other words, there can exist inequality without poverty, and there can be
poverty without inequality. There are different variables to analyze this issue such
as the indicators for economic development.

Economic inequality when contrasted with economic development.

To apply a proper analysis of economic inequality, one must first analysis the
conditions in which a nation or region are positioned regarding economic
development, according to (Roldan P, 2013) economic development is defined as
“the capability that a country has to generate wealth, while reflecting the life quality
of the population of the inhabitants of certain territories”. Therefore, economic
development is related to the productive capability of a region that is directly
correlated to the citizens’ well-being. So, to analyze economic inequality, one must

2
first present the variables that make up economic development, which according to
(Samuelson P, 2010) are:

• Per capita income

When talking about an inequality of incomes, one can mention a disparity in

the distribution of the incomes that originate both from the population´s work and the
available capital in the region, providing the capacity to categorize the income
distributions in two ends, one where the people who have the most are positioned
(superior), and the other where the people who have the least incomes (inferior).
Therefore, by applying the following formula we can measure the gaps for the
superior end:

Inequality= Average income of the richest people/Average income of the

population

So, to measure of the inequality in wages existing in Nuevo Leon throughout

the years, the following chart can be analyzed:

Maximum average monthly wage comparison in Nuevo Leon

Year 2020 2019 2018 2017 2016
Average
high salary
$79,380 $126,000 $108,000 $108,000 $90,000
registered in
Nuevo Leon
Average
wage in $7,850 $12,465 $11,764 $11,084 $10,542
Nuevo Leon
Inequality
10.11 10.10 9.18 9.74 8.53
coefficient

And to interpret these results, according to (Cingano, 2014) “if this coefficient
faces a set of increases, the inequality regarding the incomes will be higher, meaning
that the gap between the richest and the rest of the population will be more notorious”.

3
 Therefore, when analyzing the inequality coefficients, collected from 2016 to
2020, one can notice that there is an increase of two units that has been building up
throughout the last 5 years, so, when analyzing the results obtained from the chart
it can be inferred that the inequality between the richest demographic of the
population in Nuevo Leon which is approximately from a 1 to a 4% of the
economically active segment of the state´s total population is steadily presenting a
set of increases throughout the years, this can be attributed to the fact that the
inflation rates have been also almost constantly increasing, therefore the acquisitive
power in the state has been reduced when contrasted with the value that the
Mexican peso has been possessing from year to year, there are also statistics that
most of the population earns between one to three minimal wages, therefore, in
terms of wage inequality regarding the superior end of the income distribution there
is a state of inequality, due to the fact that only a minority of the population can earn
said amounts derived from work activities.

• The quality of health care services

On the other hand, another one of the variables that can describe and
represent fundamental statistics is the access that the whole population has to health
care services, because in equal conditions the ideal scenario would be a one in
which most of the citizens if not everyone can have access to health care services,
whenever they require it.

By analyzing the statistics provided by the government of Nuevo Leon, there

is an interval in which the lowest municipality percentage of people that possess
access to health care services is Los Aldamas with an amount of an 83%, and the
highest municipality percentage of people that can access health care services
whenever they need them is Galeana with a 97% percentage of its population. With
these statistics, the state of Nuevo Leon possesses an average percentage of 88%
of people that are affiliated to a medical insurance when the amounts of all
municipalities are weighted. On general terms, the state of Nuevo Leon provides its
citizens with equal conditions in terms of health care services, since there are several
institutions that provide insurance to workers, and other demographics of the

4
population, such as IMSS, ISSTE, the popular insurance and other private
institutions that provide paid insurances for particular people through various plans.

• Educational or literacy levels

Another of the variables of economic development that can be analyzed is the

one that measures the educational or literacy levels of the population. Since
developed regions in which the capabilities of providing equal conditions in various
aspects tend to prevent gaps between certain demographics of the population and
increase the ability of the territory to produce wealth.

So, when analyzing the statistics in the state of Nuevo Leon regarding this
variable, one can get the following results:

➢ Within the state of Nuevo Leon approximate a 1% of people from ages

15 or older do not know how to either read texts or write them, placing
this demographic of the population in the category of a minority, since
it is not even a tenth of it. And within this minoritarian segment of the
population, the predominant part of this illiterate demographic is people
from ages 75 and older, with this fact one could infer that in previous
times those generations did not have the opportunity to study and gain
those knowledges, since maybe they had to work from very young
ages to help their families, while overlooking their education in the
process. This is clearer when the percentages of illiterate people from
both gen Z people and millennials are the lowest, having a 0.3% of the
total gen Z population that is illiterate, and a 0.7% of millennials that is
illiterate in the state of Nuevo Leon, showing that with each new
generation there is a downtrend of illiteracy percentages, since there
are more capabilities for young people to study despite their
economical position.
➢ On the other hand, in terms of completed educational levels, the
weighted average of the population points that approximately the
population spends and average of almost 11 years studying, meaning

5
 that most of the population at least went all the way through the second
year of high school and in some favorable cases, ended their upper
secondary education periods successfully.

Therefore, when analyzing these economic development variable, there is a

inference that there is an equality in terms of schooling and literacy, because the
levels of illiteracy are getting lower generation by generation, and the schooling
periods that the population undergo seem to go on an uptrend, allowing the
population to reduce the economic inequality, by providing the population with the
sufficient tools to produce wealth, being knowledge one of the fundamental ones in
the fast changing information era.

• Nutrition levels

Regarding food, according to (Caritas,2018) “there is a problem in which a

few inhabitants of the population of Nuevo Leon have a lot of resources, while many
of the citizens have little or nothing to live with.

As a matter of fact, there is a problem in Nuevo Leon that year by year

presents an uptrend, which is food poverty, according to (Caritas, 2018) this term is
defined as “the inability of obtaining the basic food basket, as well as other
consumption goods, even if a certain individual used all of his or her available income
to acquire said goods”.

As previously mentioned, the issue of food poverty is on an uptrend, meaning

that the percentages of people that live under these poor conditions increase year
by year, according to (Caritas, 2018) “the historical maximum for the statistics of this
issue in Nuevo Leon pointed that approximately a 25% of the population could not
acquire the fundamental consumption goods to live in an optimal manner, in other
words the historical maximums of this numbers stated that one fourth of the
population is under food poverty conditions”.

• Capital to work and produce.

6
 Being Nuevo Leon one of the most solid industrial states in the country, it is
safe to assume that the capital to work and produce is stable, especially in Apodaca,
which is the industrial capital and main job generation source in the state of Nuevo
Leon. According to (Casas, 2016), “Nuevo Leon is one of the best options to work in
the country, due to the fact that it the state with the highest acceleration in terms of
manufacturing growth, when compared to all the other states in the country, also it
is one of the states with the most job opportunities for any person, providing actions
such as job fairs for various positions, a diverse and substantial job demand, high
salaries, and better investment conditions. Also, it is one of the most viable options
for entrepreneurs, since the procedures are six times cheaper than for example the
capital of the country, also some processes are more efficient, for instance if new
companies want to acquire access to a service of an electricity network, in other
states it takes an average of 112 days, while in Nuevo Leon it only takes
approximately 44 days. Lastly, regarding the minority investor protection index in
Nuevo Leon, the state possesses six points out of ten, being one of the best ratings
alongside the city of Mexico”.

So, in terms of working capital to manufacture, Nuevo Leon is one of the best
positioned states in the Mexican Republic, providing its economically active citizens
positive conditions to develop in terms of production or manufacturing.

• The existence or lack of corruption

Another of the factors that can both be detrimental for economic development
and be a triggering aspect for economic inequality can be the existence of corruption
of government. According to (INEGI, 2017), in recent years “there have been polls
in which a 57% of the population that is 18 or older state that the main problem of
the country is the existence of corruption in the government”, however in order to be
able to get the accurate that Nuevo Leon possesses, one must analyze the incidence
of acts of corruption rate, provided by the ENCIG, according to the statistics of this
institution, Nuevo Leon has the 17th position in the ranking of the states that have
witnessed more corruption acts, being the city of Mexico the first spot of this ranking,
so out of the 32 that exist in the country Nuevo Leon would be located in a mid-tier

7
of corruption, when compared to other countries, meaning that around 22 or 25 out
of 100 citizens of the state have experienced actions of corruption from the
corresponding authorities, either police officers or governmental figures. However,
in recent years there has been an inverse correlation in which the rate of
investigations regarding corruption increases and the incidence of corruption
decrease, when analyzed on a yearly basis.

It is important to analyze the corruption statistics, because the impunity of

these actions lead to state of inequality both socially and economically speaking,
due to the fact that most of the times, specially the corruption actions of the
government tend to compromise the resources of the state, leading to a mishandling
of these, which can compromise the available assets that the citizens of the state of
Nuevo Leon can use to live in an optimal way, (Rivera, 2020), “in the year 2019 the
registered actions of corruption in the state costed the citizens who were victims of
these an approximate amount of 399 billion pesos (MXN), derived from 14,394 acts
of corruption, providing an statistic pointing that the cost of these acts per each
100,000 inhabitants was an approximate of $1800 pesos (MXN)”, however
according to (Barcenas, 2020) “the surveys´ results provided by the INEGI pointed
that the acts of corruption faced a reduction of approximately 24.4%, going down
form 13,690 action in 2017 to a total of 10,348 in 2019.

• The emigration levels of qualified work

There is also a problem that is mostly present when there is economic

inequality, which is known as brain drain, which consists of a phenomenon in which
according to (Young, 2020) “talented professionals that originated from a developing
country flee from their home countries, in order to achieve better growth
opportunities in a first world country”.

According to the statistics provided by the (CEDAT, 2020), “in Nuevo Leon
this issue costs an approximate of $70,000 dollars for each young person that is 18
years or older, eliminating the possibility of growth derived from the expertise and
abilities of these people.”

8
 On the other hand, according to (Saavedra, 2020) “this issue can be derived
from a problem of inequality in certain aspects, such as gender role, for instance in
Nuevo Leon alongside Jalisco and Mexico city there are not as much specialized
services or perks for workers, having a greater focus for male workers rather than
female ones, due to the fact that there is a considerable amount of discrimination,
regarding the role of the female gender, either socially or economically, since there
are a lot of stereotypes specially regarding the skills, with the wrong belief that in
most instances the talents of female citizens are different or lower than those of
males”.

The total economic inequality coefficient

Once all the variable of economic development are analyzed, it can be

inferred that the state of Nuevo Leon possesses a set of relatively equal conditions
in most of the variables such as education in recent generations.

However, there is a need to calculate the exact amount of inequality existing

in Mexico, therefore one of the most used way is the Gini index, which is applied to
measure the inequality between the citizens, this model consists of a number in
which the closer it is to zero, the lower the inequality of wages, meaning that the
economic inequality is also low, so when analyzing the this coefficient in all states
the following results are gathered according to the government of Mexico:

Gini coefficient according to total incomes in Mexico

Less than 0.458 0.458 - 0.478 0.479 - 0.501 More than 0.501
TLAXCALA 0.411 CHIHUAHUA AGUASCALIENTES COAHUILA 0.503
BAJA 0.458 0.486 HIDALGO 0.504
CALIFORNIA MÉXICO 0.461 SINALOA 0.486 CDMX 0.507
0.434 MORELOS 0.467 QUERÉTARO ZACATECAS
DURANGO 0.446 JALISCO 0.468 0.488 0.507
GUANAJUATO NAYARIT 0.471 GUERRERO 0.489 YUCATÁN 0.511
0.449 SONORA 0.476 VERACRUZ 0.490 OAXACA 0.513
SAN LUIS

9
 MICHOACÁN POTOSÍ 0.477 QUINTANA ROO CHIAPAS 0.517
0.452 TAMAULIPAS 0.494 PUEBLA 0.572
NUEVO LEÓN 0.478 CAMPECHE 0.500
0.453
BAJA
CALIFORNIA
SUR 0.454
TABASCO 0.456
COLIMA 0.457

Therefore, when analyzing the statistics, it can be said that Nuevo Leon is the
sixth state closest to zero in terms of the Gini coefficient, in other words when
compared with other states Nuevo Leon is the sixth best state in terms wage and
economic equality.

Poverty in Nuevo Leon

As previously mentioned, poverty and economic inequality are not directly

correlated in a constant way, since there are many variables to measure the
inequality of a region.

As previously seen, in terms of inequality the state of Nuevo Leon is in the top
10 states that have the lowest inequality levels in the country, on the other hand,
regarding its poverty levels, according to the statistics provided by (CONEVAL, 2018)
“the statistics of poverty in Nuevo Leon in a period of 10 years (2008-2018)
presented decreases from a 44.4% to a 41%, and the extreme poverty indexes were
lowered from an 11% to a 7.4%”. On the other hand, the other economic
development variables have presented improvements in a period of ten years,
positioning Nuevo Leon a one of the least poor states in the country, with statistics
such as:

Poverty variables compared over the years

2008 2018

10
 Academic stagnation 21.9% 16.9%
Lack of healthcare
38.4% 16.2%
services
Lack of social security 65% 57.3%
Quality in housing
17.7% 11.1%
services
Lack of basic housing
22.9% 19.8%
services
Lack of alimentation
21.7% 20.4%
services

These improvements over the previously analyzed variables can be attributed

to various actions done in the country such as support programs, or investments in
fundamental aspects for economic development such as education, by having three
of the most important world class universities which are Tec de Monterrey, UANL,
and UDEM.

Proposals to reduce both the economic inequality and poverty in the state of
Nuevo Leon

Once the situation of the state of Nuevo Leon is analyzed, there can be
various approaches that can be taken to continue to mitigate both the problems of
poverty and economic inequality, such as:

• Make proper auditing and investigations regarding the corruption actions

done by the authorities of the state, since they cost millions of pesos, with a
historical maximum of 399 billion pesos in recent years.
• Once the corruption actions are reduced or in a best case scenario eradicated,
the said resources that are mishandled due to these actions could be invested
in better infrastructures to produce in order to generate more jobs for the
citizens, in better educational services to form more professionals that can
contribute to the generation of wealth in the state with their expertise and

11
 abilities, provide better support programs or institutions to help people in need
such as Caritas that provides people with warm meals in case they require
them.
• On the other hand, to reduce the inequality there must be a set of reforms
that regulate the gender roles in companies, since there are still misbeliefs
that women do not have the same talents as men, therefore having lower
salaries.

12
 Conclusion

Throughout the development of the previously analyzed topic there were a

set of finding regarding the inequality and poverty levels in Nuevo Leon.

The analysis was made through the comparison of the diverse economic
development variables that resulted in the following results, in terms of per capita
income by being one of the most stable countries to work since the state is one of
the most important industrial capitals of the state, allowing the average incomes of
the population stay in constant amounts, in terms of healthcare services an average
of the 88% of the population can get their proper services since there are multiple
options such as IMSS, ISSTE, or private insurance institutions that provide this
services, regarding the educational and literacy levels there are multiple statistics
that show that year by year and generation by generation the educational levels have
been increasing with having an average of most of the people at least ending their
high school education, while the population that is illiterate decreases whenever new
statistics are disclosed. These as well as other variables position Nuevo Leon as the
sixth of the states that possess the lowest economic inequality indexes when
applying the Gini coefficient in the total incomes.

On the other hand, regarding poverty the statistics show a downtrend in the
poverty indicators, for instance the academic stagnation presented a decrease of a
5% in a period of 10 years or the healthcare centers which presented a decrease
of approximately a 22.4% in a period of ten years, meaning that Nuevo Leon has
been one of the states that has been keeping efforts on eradicating poverty.

However, to be able to mitigate this problem further, there are some actions
that should be done, for instance corrective measures towards corruption that
costs billions of pesos to the state, which could be invested in better educational
and working infrastructures to promote a better working capital in which the
population can generate more wealth for the state through their expertise and
abilities in equal conditions.

13
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Tobar, C. (2017). Los 10 estados con más pobres en México. 23/05/2021, de Forbes
Sitio web: https://www.forbes.com.mx/los-10-estados-con-mas-pobres-en-
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Young, J. (2020). Brain Drain. 23/05/2021, de Investopedia Sitio web:

https://www.investopedia.com/terms/b/brain_drain.asp#:~:text=Geographic
%20brain%20drain%20happens%20when,country%20in%20favor%20of%2
0another.&text=These%20factors%20prompt%20skilled%20and,places%20
that%20offer%20better%20opportunities.

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