Paper short abstract:

We suggest a new approach to analysing the distribution of natural resource revenues and apply it Mexico. Defining a natural resource entitlement as a citizen’s share of their country’s resource rents, we find that Mexican fiscal policy is no longer progressive when judged against oil entitlements.

Paper long abstract:

This paper suggests a new approach to analysing the distribution of natural resource revenues and applies it to the case of Mexico. It defines a natural resource entitlement as a citizen's per capita share of their country's natural resource rents. It proposes that the progressiveness or regressiveness of fiscal policy should be judged against a baseline that takes this entitlement into account. Applying this approach to Mexico it finds that, while official estimates imply that Mexican fiscal policy is progressive relative to market income, it ceases to be so once oil entitlements are taken into account. It considers a fiscal reform that would ensure that every citizen received their oil entitlement, and that in doing so would virtually eliminate extreme poverty.