The role of inequality in development has been the subject of long-standing debates in academic and policy circles. Notwithstanding disagreements about exactly how the two are linked, conventional wisdom agrees that inequality is an objective ‘fact’ that can be measured free from ideological considerations. New data detect trends towards higher inequality, weaker economic positions for those at the bottom, and a concentration of wealth at the very top of the distribution in most regions. Inequality studies as currently practiced are ill-equipped to accommodate the empirical changes and the resulting theoretical implications. Putting an end to over half a century of mainstream consensus assuming that inequality would automatically recede with developmental progress, the discipline needs rethinking.

My thesis proposes a new research agenda for studying inequality that is not only able to integrate these empirical developments, but which also challenges what has been taken for granted: that inequality just is, independently of context, time and observer. Instead, it proposes that along with its objective existence, inequality is a relational phenomenon subjectively experienced relative to a particular context. In five interconnected Sections, my dissertation challenges conventional views of how inequality looks, how it is seen, and what can be done about it, especially in developing countries.

The study focuses on the ways in which inequality is perceived, and how it is perpetuated. After an introduction to the subject in Section I, Section II investigates how inadequate measurement perpetuates inequality, proposing a new indicator that shows that inequality is largely defined in the extreme ends of the income distribution. Section III examines the reproduction of inequality at the bottom, contrasting minimum wage policies over recent decades in Mexico with those of other countries in Latin America. In light of a political economy resistant to change, Section IV scrutinizes Mexican elites, exploring how inequality is perceived from the very top of the income distribution, how this affects policy-making and, subsequently, measured inequality levels. Section V concludes by outlining the theoretical and practical implications of my findings.