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Inequality Trends and their Determinants: Latin America over 1990-2010

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Abstract

The paper reviews the steady and widespread decline in income inequality which has taken place in most of Latin America over 2002-10 and which––if continued for another 2-3 years––would reduce the average regional income inequality to pre-liberalization levels. The paper then focuses on the factors, which may explain such inequality decline. A review of the literature and an econometric test indicate that a few complementary factors played an important role in this regard, including a drop in the skill premium following a rapid expansion of secondary education, and the adoption of a new development model by a growing number of left-of-centre governments which emphasizes fiscally-prudent but more equitable macroeconomic, tax, social expenditure and labour policies. For the region as a whole, improvements in terms of trade, migrant remittances, FDI and world growth played a less important role than expected although their impact was perceptible in countries where such transactions were sizeable.

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  • Giovanni Andrea Cornia, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2010," Working Papers - Economics wp2012_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2012_02.rdf
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    More about this item

    Keywords

    income inequality; human capital inequality; policy regimes; external conditions; Latin America;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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