Schooling indicators during Mexico's "Lost decade"

The 1980s have been described as a "lost decade" for Latin America as a res ult of the sharp decline in income that followed the international debt cri sis. Using the case of Mexico, this paper explores the impact of the lost d ecade on schooling indicators. This paper finds that falling opportunity co sts in the 1980s improved schooling indicators at the same time that reduct ions in the level of national income worsened them. The net result of these opposing effects was relatively stagnant enrollment rates. Simulations sug gest that Mexico's secondary school enrollments would have increased consid erably, had the 1980s economy grown at rates even one-half of those experie nced in the 1970s. Analyses of state panel data for this period reveal that continuation rates responded more strongly to economic conditions in poore r states, and that state schooling indicators were sensitive to urbanizatio n, sectoral structure and school spending patterns among states. [JEL 121, O54] (C) 1999 Elsevier Science Ltd. All rights reserved.