Life-Cycle Deficit over Time in Mexico: A Pooled Time Series Cross-Section Analysis

Iván Mejía-Guevara, Harvard University

I analyze in this article differences by age and time of the labor income and consumption of Mexico, the main determinants of the life-cycle deficit. Due to lack of panel data to perform longitudinal analysis, repeated cross-sectional survey data available from 1992 to 2010 is used. Age profiles were constructed by following the National Transfer Accounts (NTA) methodology. I apply an age-period-cohort (APC) analysis, using a random effects hierarchical APC model specification to incorporate the dimension of time into the analysis. This paper is intended to shed light on the causes of possible differences between the age pattern of consumption and labor income over time, as well as the kind of determinants potentially involved in the process, such as: specific policies, quality of data, period, and/or cohort effects.