The impact of financial inclusion on social mobility in Mexico: a regional and state-level analysis

Abstract

This thesis examines the impact of financial inclusion on social mobility, specifically focusing on the intergenerational persistence of socioeconomic status. Financial inclusion is operationalized as the presence of a bank account or credit card among parents when their child was 14 years old. Utilizing rank-rank models and a comprehensive dataset, this research disentangles the effects of financial inclusion across national, regional, and state levels within México. Our findings indicate that nationally, financial inclusion is associated with a decrease in intergenerational persistence, suggesting an enhancement in social mobility. Children from families with financial products demonstrate higher socioeconomic ranks compared to their counterparts from non-inclusive backgrounds. This effect is most pronounced at lower parental socioeconomic indices, where financial inclusion appears to facilitate significant upward mobility. However, the impact of financial inclusion is found to be heterogeneous across different regions and states. In some areas, financial inclusion fosters greater social mobility, while in others, it inadvertently reinforces economic advantages, increasing the persistence of high socioeconomic status among the affluent. This variation is partly explained by regional economic disparities. The study contributes to the existing literature by providing a nuanced analysis of how financial inclusion affects social mobility in diverse economic landscapes. It highlights the dual role of financial inclusion in both facilitating upward mobility for economically disadvantaged groups and perpetuating status persistence among higher-income brackets.