Schooling indicators during Mexico’s “Lost decade”

The 1980s have been described as a “lost decade” for Latin America as a result of the sharp decline in income that followed the international debt crisis. Using the case of Mexico, this paper explores the impact of the lost decade on schooling indicators. This paper finds that falling opportunity costs in the 1980s improved schooling indicators at the same time that reductions in the level of national income worsened them. The net result of these opposing effects was relatively stagnant enrollment rates. Simulations suggest that Mexico’s secondary school enrollments would have increased considerably, had the 1980s economy grown at rates even one-half of those experienced in the 1970s. Analyses of state panel data for this period reveal that continuation rates responded more strongly to economic conditions in poorer states, and that state schooling indicators were sensitive to urbanization, sectoral structure and school spending patterns among states. [JEL I21, O54]  1999 Elsevier Science Ltd. All rights reserved.