The recent decline of inequality in Latin America: Argentina, Brazil, Mexico and Peru
AbstractBetween 2000 and 2006, the Gini coefficient declined in 12 of the 17 Latin American countries for which data are available. Why has inequality declined? Have the changes in inequality been driven by market forces such as the demand and supply for labor with different skills? Or have governments become more redistributive than they used to be, and if so, why? This paper attempts to answer these questions by focusing on the determinants of inequality in four countries: Argentina, Brazil, Mexico and Peru. The analysis suggests that the decline in inequality is accounted for by two main factors: (i) a fall in the earnings gap between skilled and low-skilled workers (through both quantity and price effects); and (ii) more progressive government transfers (monetary and in-kind transfers). Demographic factors, such as a change in the proportion of adults (and working adults) per household, have been equalizing but the magnitude of their contribution has been small by comparison. In Brazil, Mexico and Peru, the fall in earnings gap, in turn, is mainly the result of the expansion of basic education over the last couple of decades, which reduced inequality in attainment and made the returns to education curve less steep. It also results from the petering out of the unequalizing effect of skill-biased technical change in the 1990s associated with the opening up of trade and investment. In Argentina, the decline in earnings inequality seems to be associated with government policies that without the windfall of high commodity prices will be hard to sustain.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 140.
Length: 44 pages
Date of creation: 2009
Date of revision:
Income inequality; Latin America; wage gap; government transfers.;
Find related papers by JEL classification:
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-31 (All new papers)
- NEP-DEV-2009-10-31 (Development)
- NEP-LAB-2009-10-31 (Labour Economics)
- NEP-LAM-2009-10-31 (Central & South America)
- NEP-LTV-2009-10-31 (Unemployment, Inequality & Poverty)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Sanchez, Miguel Eduardo & Senderowitsch, Roby, 2012. "The political economy of the middle class in the Dominican Republic : individualization of public goods, lack of institutional trust and weak collective action," Policy Research Working Paper Series 6049, The World Bank.
- Raymundo M. Campos-Vázquez, 2010.
"Why did wage inequality decrease in Mexico after NAFTA?,"
Serie documentos de trabajo del Centro de Estudios EconÃ³micos
2010-15, El Colegio de México, Centro de Estudios Económicos.
- Raymundo M. Campos-Vázquez, 2013. "Why did wage inequality decrease in Mexico after NAFTA?," Economia Mexicana NUEVA EPOCA, , vol. 0(2), pages 245-278, July-Dece.
- Raymundo M. Campos Vázquez & Andrés Hincapie & Rubén I. Rojas Valdés, 2011. "Family Income Inequality and the Role of Wives Earnings in Mexico: 1988-2010," Serie documentos de trabajo del Centro de Estudios EconÃ³micos 2011-07, El Colegio de México, Centro de Estudios Económicos.
- Francisco Rodriguez & Arjun Jayadev, 2010. "The Declining Labor Share of Income," Human Development Research Papers (2009 to present) HDRP-2010-36, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria Ana Lugo).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.