United States-Mexico Income Convergence?

The US-Mexico income gap is not a new phenomenon brought about by recent policy trends. Rather, the income gap has been a permanent feature and defining characteristic of the two national economies for at least two centuries. In this paper the income convergence question will be examined from two perspectives. First, the US-Mexico income gap will be examined from the perspective of conventional neoclassical growth and international trade theories. The convergence implications of neoclassical theory are important because policy makers are often trained in that tradition. Second, given the enduring character of the income gap, it will be argued that the income gap is an institution that, like other institutions, is resistant to change and will not respond to policies that fail to recognize its institutional character.