# **5. Conclusion**

Rural poverty remains a crucial part of the poverty story in Mexico as a whole. Mexico is a fairly largely urbanized country, but poverty in rural areas is so widespread and persistent that about 13 million poor are still found in the countryside (Verner 2004). Therefore, it seems clear that the rural economy must remain a central focal point for policy makers aiming to reduce poverty given the level and growth of the rural nonagricultural sector in Mexico. It is natural that attention is increasingly focused on the role that these occupations play in improving living conditions and reducing poverty and social exclusion.

This distribution profile of the sector revealed that nonfarm income shares increase with overall consumption levels and, also, with time. The rural population in lower quintiles of the consumption distribution tends to earn a larger share of their nonagricultural incomes from wage labor activities. For the poorest, lowreturn/productivity wage labor activities are important.

The quantile wage regression analysis for rural Mexico shows a rather heterogeneous impact pattern of individual characteristics across the wage distribution on monthly wages. That is, the magnitude of the affect of a wage determinant is different depending on the worker being rich, poor or placed in the median of the wage distribution. Findings reveal that education is key to earning higher wages; the more educated workers earn higher wages than their less educated peers. Also experience impacts positively on wages and it is increasing with age. Gender disparities are also at play in the rural Mexican labor market. Finally, workers in more dispersed rural areas earn less than their peers in semi-urban rural areas (localities with less than 15,000 inhabitants).

The rural nonfarm sector is heterogeneous and includes a great variety of activities and productivity levels across nonfarm jobs. Moreover it can reduce poverty in a couple of distinct but qualitatively important ways in rural Mexico. First, highproductivity activities seem to provide the rural population with sufficient income to escape poverty. Second, vulnerable segments of the population, such as women and many of the poorest tend to be concentrated in the low or less productive rural nonagricultural activities—mainly due to skill and educational deficiencies and location disadvantages. These low-productivity/return occupations nevertheless provide a critical contribution to their livelihoods preventing further destitution.

When examining correlates of nonfarm employment in rural Mexico, findings suggest that the two key determinants of access to employment and productivity in nonfarm activities are education and location. Both determinants are also significantly correlated with poverty (Verner 2005). First, there is strong evidence that the educated have better prospects in the nonfarm sector. This is emphasized when nonfarm activities are divided into low-return and high-return activities. Education is a particularly important determinant of employment in the better-paid nonfarm activities. Second, the nonagricultural sector is also closely linked to location. There appears to be evidence that the nonfarm sectors are more vibrant in more populated areas which are connected to

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