The Real Oaxaca Decomposition : Convergence within Mexico’s Oaxaca Region in the Twenty-First Century — Do Types of Crime and Religious Belief Matter?

The paper empirically examines municipality convergence within Mexico's southern Oaxaca region. We find municipalities are converging more rapidly than the “iron law” of 2% with up to 8% β convergence. Though homicides from the Drug War have negatively impacted growth, overall crime perhaps through strengthening local institutions has a positive but weak impact. Higher income inequality and Catholic belief are associated with higher per capita GDP growth in Oaxaca overall and within two micro-regions. The positive impact of a higher share indigenous population on growth in the relatively urban Valles Centrales micro-region suggests a cultural element to policy making with the dependency ratio drag on growth suggesting a need for policies that give more attention to how retirees can continue to participate in the economy as well