The ability to raise revenues from taxes – called “fiscal capacity” – is a crucial aspect for the functioning of any state. Being able to tax citizens, and collect revenues efficiently, is a cornerstone of state formation and survival. Secondly, greater fiscal capacity implies greater access of the state to resources needed to provide public goods and services. Developing countries are only able to raise a small share of taxes. Typically, they collect between...

As with many other developed and emerging economies, in recent decades Mexico has experienced a long-term decline in the labour income share. In other words, wages have decreased compared with other sources of income such as capital income. The share of wages in total income has fallen from about 40% in the mid-1970s to around 28% in 2015. To understand the dynamics behind this trend our research paper takes closer look at the decline for 1990-2015, in both the share of wages in value...