We describe the main cross-sectional facts on individual and household earnings, labor supply, income, consumption and wealth in Mexico in the decade of the 1990s. We use two di¤erent data sources: the Mexican Employment Survey (ENEU) and the Mexican Income and Expenditure Survey (ENIGH). The contribution of the paper is twofold. First, we integrate the two surveys to provide a complete characterization of the changes in employment, wages, income, consumption and wealth in the 1990s. Second, we highlight some distinctive features that characterize Mexican economy in this decade. In particular, we focus on the increase in the number of informal workers in the mid 1990s and we study its relationship with the increase in wage inequality.

While several studies have documented the expansion of the informal sector and its detrimental impact on development, few have noted that informality and wage inequality tend to move together. Using Mexico as a case study, I show that between 1987 and 2002 wage inequality within informal workers accounted for over 60 % of total wage inequality and that the Mexican financial crisis of the mid-1990s increased the share of informal workers and, via this, wage inequality. The results provide supportive evidence that in Mexico higher wage dispersion is one of the channels through which informality negatively affects development. JEL codes: O17, J31, C36.

This paper investigates the relationship between government interventions to promote investments in innovation and firm‐financed R&D. Merging a unique panel data set on Argentinean firms in the 1990s with a data base on different types of public support received through the FONTAR (Fondo Tecnólogico Argentino) program, we estimate a fixed effects model and find evidence of a significant positive impact of FONTAR on private R&D. A 1 per cent increase in the amount received through FONTAR induces an average increase of 547.6 real pesos in annual R&D expenditures. The result is robust to the use of an instrumental variable estimator that controls for the potential bias induced by changes in the structure of the program. An analysis by type of financial support reveals that the impact is mainly due to targeted and fiscal credit with no evidence that funding received through matching grants has an additionality effect on private investments. This result is in line with the predictions of a simple theoretical model that investigates the impact of different policy interventions to promote investments in R&D. When firms’ preferences are not directly observable, the provision of direct subsidies is more likely to incur the risk of adverse selection attracting firms that would have invested in innovation even in the absence of public support or dismiss some of the non‐financed projects, thus leaving unchanged or decreasing the overall level of expenditures in R&D.Innovation and R&D, policy evaluation, panel data, O32, O38, C23,

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