Economic Growth and Inequality: Evidence from the Young Democracies of South America
AbstractWe investigate in this paper whether income growth has played any role on inequality in all nine young South American democracies during the period 1970-2007. The results, based on dynamic panel time-series analysis, robustly suggest that income growth has indeed played a progressive role in reducing inequality during the period. Moreover, the results suggest that this negative relationship is even stronger in the 1990s and early 2000s, a period in which the continent achieved macroeconomic stabilisation, political consolidation and much improved economic performance. On the contrary, during the 1980s (the so-called "lost decade"), the negative income growth experienced by the continent at the time has hit the poor the hardest, or alternatively speaking, it has played a regressive role on inequality. All in all, we suggest that consistent growth, and all that it encompasses, is an important equaliser which should not be discarded as a serious option by policy makers interested in a more equal income distribution.
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Bibliographic InfoPaper provided by University of Pretoria, Department of Economics in its series Working Papers with number 201301.
Length: 25 pages
Date of creation: Jan 2013
Date of revision:
Growth; inequality; South America;
Other versions of this item:
- Manoel Bittencourt, 2013. "Economic Growth and Inequality: Evidence from the Young Democracies of South America," Working Papers 361, Economic Research Southern Africa.
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-LAM-2013-02-03 (Central & South America)
- NEP-MAC-2013-02-03 (Macroeconomics)
- NEP-PBE-2013-02-03 (Public Economics)
- NEP-POL-2013-02-03 (Positive Political Economics)
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