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Income Distribution under Latin America’s New Left Regimes

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Abstract

This paper reviews the decline in income inequality that has taken place over 2002-2007 in most Latin American countries against the background of its steady increase over 1980-2002. The paper analyzes then the factors that could explain this trend reversal. It focuses in particular on favorable external conditions, cyclical factors, improvements in the distribution of educational achievements and the subsequent drop in skill-premium, and changes in macroeconomic and social policies introduced in several countries, particularly by a growing number of left-of-centre governments which have come to power during the last decade. An econometric test for the years 1990-2007 indicate that, in addition to a favorable business cycle and external conditions, a decline in skill premium and the new policy model of fiscally prudent social-democracy which is emerging this decade in much of Latin America impacted favorably the distribution of income. If this approach will survive the current crisis, much of the recent inequality decline is likely to become permanent.

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Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Economics with number wp2009_16.rdf.

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Length: 28 pages
Date of creation: 2009
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Handle: RePEc:frz:wpaper:wp2009_16.rdf

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Keywords: income inequality; human capital inequality; external conditions; policy regimes; Latin America.;

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  1. Why is inequality falling in Latin America?
    by Andy Sumner in Global Dashboard on 2011-08-04 12:38:02
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