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The effects of growth and economic reform on income distribution in Latin America

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  • Morley, Samuel A.

Abstract

The purpose of this article is to investigate the determinants of the distribution of income in Latin America, focusing in particular on two questions: one is the relationship between the distribution and income, while the other is the impact of the package of structural economic reforms that have been adopted in Latin America in recent years. Two main conclusions are drawn from the econometric evidence. There appears to be a robust and significant relationship between the distribution and income. It has the inverted U-shape that Kuznets predicted, but this relationship has been shifting in a regressive direction over time. Growth is now a good deal less progressive than it used to be. In the aggregate that means that further growth in Latin America is unlikely to improve the distribution much, if at all, so supplementary measures will have to be taken. Among those suggested by the regressions are the maintenance of low inflation rates and investment in education. Generally speaking, the structural reforms appear to have a regressive effect on distribution, but that effect is small and not very robust statistically. Reforms in different areas have differing effects on equity. Trade reform is regressive in all of our specifications, but it is insignificant in all but the nationwide sample. Tax reform is unambiguously regressive, and opening up the capital account is unambiguously progressive. The results for trade and tax reform and capital account liberalization are the most robust and significant. For the other two reforms -privatization and financial reform- the available data were not good enough to give a clear answer.

Suggested Citation

  • Morley, Samuel A., 2000. "The effects of growth and economic reform on income distribution in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    • Handle: RePEc:ecr:col070:10727
    Note: Includes bibliography
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    Cited by:

    1. Leticia Arroyo Abad & Pablo Astorga Junquera, 2017. "Latin American earnings inequality in the long run," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 11(3), pages 349-374, September.
    2. Antonio Andres & Carlyn Ramlogan-Dobson, 2011. "Is Corruption Really Bad for Inequality? Evidence from Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 47(7), pages 959-976.
    3. Florencia Lopez Boo, 2006. "Changes in poverty and the stability of income distribution in Argentina: evidence from the 1990s via decompositions," Working Papers 33, ECINEQ, Society for the Study of Economic Inequality.
    4. Antonio Rodriguez & Carlyn Ramlogan, 2007. "Corruption, privatisation and the distribution of income in Latin America," Development Research Working Paper Series 09/2007, Institute for Advanced Development Studies.
    5. Miguel Székely & Nancy Birdsall & Jere R. Behrman, 2000. "Economics Reform and Wage Differentials in Latin America," Research Department Publications 4235, Inter-American Development Bank, Research Department.
    6. Morley, Samuel A., 2001. "What has happened to growth in Latin America," TMD discussion papers 67, International Food Policy Research Institute (IFPRI).
    7. Yoshimichi Murakami, 2018. "Globalization and Income Inequality in Latin America: A Review of Theoretical Developments and Recent Evidence," Discussion Paper Series DP2018-16, Research Institute for Economics & Business Administration, Kobe University, revised Aug 2018.
    8. Torres, Miguel & Hofman, André A., 2008. "ECLAC thinking in the CEPAL Review (1976-2008)," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    9. Berry, R. Albert, 2001. "Policy response to poverty and inequality in the developing world: where should the priorities lie?," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 33125, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Nauro F. Campos & Paul De Grauwe & Yuemei Ji, 2017. "Structural Reforms, Growth and Inequality: An Overview of Theory, Measurement and Evidence," CESifo Working Paper Series 6812, CESifo.
    11. Guillermo E. Perry & Omar S. Arias & J. Humberto López & William F. Maloney & Luis Servén, 2006. "Poverty Reduction and Growth : Virtuous and Vicious Circles," World Bank Publications - Books, The World Bank Group, number 6997, December.
    12. Miguel Székely & Pamela Mendoza, 2017. "Declining inequality in Latin America: structural shift or temporary phenomenon?," Oxford Development Studies, Taylor & Francis Journals, vol. 45(2), pages 204-221, April.
    13. García, Fernando & Bandeira, Andrea C., 2002. "Reforms and growth in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    14. Arthur MacEwan, 2007. "The Meaning of Poverty: Questions of Distribution and Power," Working Papers wp148, Political Economy Research Institute, University of Massachusetts at Amherst.
    15. Putra, Adhitya, 2019. "Poverty analysis in the macroeconomic perspective," MPRA Paper 94793, University Library of Munich, Germany, revised 02 Jul 2019.
    16. Dobson, Stephen & Ramlogan-Dobson, Carlyn, 2010. "Is there a trade-off between income inequality and corruption? Evidence from Latin America," Economics Letters, Elsevier, vol. 107(2), pages 102-104, May.
    17. Pablo Astorga, 2023. "Income Share of the Top 10%, the Middle 50% and the Bottom 40% in Latin America: 1920-2011," Working Papers 0244, European Historical Economics Society (EHES).
    18. Giordano, Paolo & Li, Kun, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.
    19. repec:idb:brikps:72378 is not listed on IDEAS

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