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On Mexican poverty-trap regimes and struggling to escape them

Published online by Cambridge University Press:  12 July 2023

Edgar J. Sanchez Carrera Open the ORCID record for Edgar J. Sanchez Carrera [Opens in a new window]  and
Wiston Adrián Risso
Edgar J. Sanchez Carrera*
Affiliation:
Department of Economics, Social Sciences, and Politics (DESP), University of Urbino Carlo Bo, Urbino, Italy CIMA UAdeC, Saltillo, Mexico
Wiston Adrián Risso
Affiliation:
Universidad de la Republica de Uruguay, Montevideo, Uruguay
*
Corresponding author: Edgar J. Sanchez Carrera; Email: edgar.sanchezcarrera@uniurb.it
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Abstract

This paper deals with the phenomenon of poverty-trap regimes in Mexico, that is, self-reinforcing mechanisms in which municipalities which start poor remain poor. We develop a coordination game of poverty traps driven by strategic interactions of economic agents: people choose to complete or not their education levels since it might be excessively costly and unprofitable. A one-shot game is constructed and then converted into a system of differential equations in which strategies that perform relatively better become more abundant in the population. Applying evolutionary games and symbolic-regimes dynamics (nonparametric and nonlinear techniques), we show that Mexican regions are in poverty-trap regimes (stable and dynamically evolving low-level equilibria) characterized by incomplete education and low income since initial conditions (education and income per capita) are such (very precarious) that poverty is the stable steady-state situation. We examine scenarios to show that to overcome the high-poverty regime by the year 2030, it is necessary to reduce incomplete education by 10% in the 5-year periods 2020–2025 and 2025–2030 and increase per-capita income by 10% in both periods.

Keywords

Behavioral macroeconomicsEconomic regimesPoverty traps’ stabilityC73I25I30O10
Type
Articles
Information
Macroeconomic Dynamics , First View , pp. 1 - 29
Copyright
© The Author(s), 2023. Published by Cambridge University Press

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